Welcome 2014, readying for a wonderful year

2013 was a very nice year, too! I invite you to read past posts, if you're interested.
We started with some very happy and very sad news, all on the same weekend. Claire announced her pregnancy, and was able to announce it to Ahmed, her father-in-law just before he died.
I went to Washington, D.C. as part of the AARO delegation to Overseas Americans Week in February. We plead our cause to the staffers of many, many Representatives and Senators. We asked them to please consider the adverse effects of citizen-based taxation and to consider adopting residence-based taxation. If you've been reading my posts, I've complained enough. It seems, though, that perhaps there might be a chance for residence-based taxation to make the Republican platform. I consider it a non-partisan reform, but if only the Republicans take it up, then so be it. Anyway, AARO is sending a new delegation to D.C. at the end of February 2014 and I hope to be part of it!
Anne took a leave of absence to explore other job possibilities, but this is really not the best economic climate for that and she will be returning to her job in January.
We spent two weeks of vacation with Claire, Geoff, and the girls in La Rochelle and in the country at the eastern side of Charentes-Maritimes. At the very end of August, Emma finally was able to sign the purchase of the property in the Tarn-et-Garonne and she and Gabriel are settling in -- not in the house yet, but at least they are down there: fixing up the house, meeting the neighbors, finding out all the things to do, and so on.
October was a busy, busy month. First Constance was born on October 3. We had a full week before she was born to become familiar with Aurelia's routine and hardly any time afterwards because I was leaving for the US, again. That was a really quick weekend trip to see my high school classmates, and I got a chance to see Jon and Eric, too, as a bonus, so it counts as a really great trip. Then, as soon as I got home, we left for La Réunion for a two-week vacation with Louis and Gwen's wedding in the middle! Anne was able to be there with us. As I said, a busy, busy month.
We had a houseful over Christmas, but not bursting because Claire, et al, stayed in England this year, to spend the holiday with Alison and the rest of the family. We also have the official announcement of a newcomer to Louis and Gwen's family, scheduled for late June or early July.
So you can see why we are ready to welcome 2014 and hope the same goes for you!

A calmer view of FATCA

US citizenship-based taxation being what it is; FATCA, being what it is, I've been thinking more calmly on the subject of FATCA these days. For one thing, I've been compliant as far as tax filings and FBARs are concerned for a long, long time, so I don't personally have any particular problem with reporting. However, I do understand the panic over the terrible penalties others face, potentially, if they have not been compliant. Either they did not know of the FBAR requirement and since they did not owe any tax, they did not realize they still had to file their taxes. The program to bring them into compliance is not really conducive to coming it. It is also punitive and, in the case of people who would owe nothing, I think there should be a more lenient approach. And the taxpayer's side of FATCA declaration, the 8938 form, is a pain in the neck, almost the same form as the FBAR, but not quite and not with the same threshold amounts. It can be confusing. But I do it.

Another aspect of my calm is that I live in France and I think the the inter-governmental agreement (IGA) that was signed on November 14 between the US and France is fair. It doesn't answer all the questions, but it helps. It is a Model IA agreement. (Price Waterhouse has a summary of types of agreements and the particular clauses for each country, as well as how far along in the agreement process they are.) Without an agreement the IRS expects all foreign financial institutions (FFI) are expected to report on US persons who hold accounts. If they do not correctly identify all their US persons; if they make mistakes, then the FFI face terrible penalties. The cost of FFI compliance and the penalties have led many institutions to just not want to do business with US persons. That burns me up. If I lived in Switzerland, I'd be frothing at the mouth, because the discrimination would be extended to my spouse, who is not a US person. With an IGA, especially the Model II, the FFI report on US persons to their own government agency, which then reports to the IRS. Not only that, there are pages of particular rules pertaining to the country and, for France, that includes a list of types of accounts that the FFI will not have to report on, at all, and a time-table to introduce increasing amounts of information to be reported. 

In summary, from the AARO meeting last week in which John Fredenburger presented the IGA, it is set to take effect “when their necessary internal procedures for entry into force have been completed”. So, when is that? Is it a treaty that has to be ratified or does agreement mean something else? Assuming things are in place, the reported information with increase over a three year period from 2014 to 2016. The required due diligence on account ID is different below and above $1,000,000 worth. And most savings accounts, the kind with (French) tax incentives, the most common in France, including the work-related ones, are excluded from being reported by the FFI. There are still some questions about a very popular type of savings/investment account called Assurance Vie. Other accounts, like checking accounts an investment accounts, if they have above the threshold amount in them, will be reported. 

Now, the FFI in France will be reporting on some, but not all accounts. That doesn't mean that I, as the US tax-filer, will not have to report them on my FBAR and form 8938. It just means that the FFI have less reason to reject US persons as customers. I think that most Americans in France have checking accounts and maybe a few of the excluded accounts. Long-term residents, like me or the children, might have the Assurance-Vie or other investment accounts. For my part, I have made sure that I have nothing that is hard to declare on my own -- simple "mono-support" Assurance-Vie with no fund-like investments that are a major headache to declare and require the help of a tax professional. Actually, once this FATCA thing gets off the ground, we should be getting the paperwork reflecting what is reported to the IRS, so that we can fill out our tax forms more easily.

I started out saying "US citizenship-based taxation being what it is; FATCA, being what it is". What I would like is change in what is. If the US were to conform to the world-wide norm of residence-based taxation, most Americans overseas would not have to deal with filing US taxes, filing an FBAR to the US, or having FATCA-related discrimination. Only those with US source income would have to deal with US taxes. ACA, with AARO support, has proposed this change to residence-based taxation. Unfortunately, with the US Congress in such dysfunctional mode, I don't think the proposal will go anywhere, soon. There is renewed interest on the part of Republicans to push for it, but I believe such radical rethinking of US doctrine will need bi-partisan support.

What can be done in the mean time? Well, a more realistic and lenient approach to allow Americans overseas to become compliant if they haven't been, so far. The first step would be to inform Americans going overseas that, should they stay abroad, they remain US taxpayers and must file..... They could put a paragraph about that on the inside passport cover! 
They could inform the parents of children born in the US that their children are Americans. If you are not American, you might not realize that quirk of US citizenship because in so many other countries "droit du sol" is not the norm. An editorial change to birth certificates to "declaration of birth and US citizenship" would take care of that. They could allow parents to disavow or renounce US citizenship for their minor or mentally incapacitated children, so that this citizenship does not become a burden on people made no effort to gain it and did not live for any significant length of time in the US. 

They could bring the FBAR threshold amounts for reporting up to the FATCA thresholds. AARO has been working to that end for years, even before FATCA -- just bring up the FBAR thresholds. If they were linked to inflation, they would be up there!

It's nice to think they could get rid of FATCA, but they won't. Let's face it, there are people who used off-shore accounts to amass undeclared income because the FFI did not have the document matching requirements that have existed in the US for decades. But let's face it, too, they are, for the most part, US residents. Now that this FATCA thing has been invented, other countries, all interested in collecting more income, think this is a great thing, so it will become, global, whether we like it, or not. Of course, a country like France is only interested in the foreign accounts of residents of France.

Barring a change to residence-based citizenship, which would be so simple, why not say that all accounts in one's country of residence are treated as "home" not "foreign" accounts, thus getting rid of FBAR and FATCA reporting on "home" accounts?

As things stand, now, in many countries, US citizenship has become a burden. It explains the current explosion in renunciations. Even I have considered it. As a member of AAWE and AARO, I was part of the efforts to make sure my children are American. I had no idea that what we had done gave them automatic US citizenship, whether we declared their birth at the embassy, or not. I thought it was their right to citizenship, but that it had to be requested (and I did, and my children have been very happy to be Americans). It turns out, I was wrong. I have learned of the case of a Canadian woman, who had knowingly relinquished her US citizenship and whose citizenship was reinstated without her requesting it and knowing it, and since renounced, has a child, now an adult, a Canadian, who is now, all of a sudden, told he is an American, too. With all those tax filing obligations. To add to the distress, he is unable to renounce this citizenship and the consulate will not allow his mother, who is responsible for all decisions, cannot renounce on his behalf. He is entrapped. If it were any other country, this would not be such a problem.

Here are the US and French versions of the IGA:

The US version of the IGA

The French version of the IGA.

If you live in a country with an IGA, how do you feel about it? What's in it that is good or bad or unclear?

A bad cold

Well, first of all, I have just published a post from about two weeks ago that I thought I had set to publish automatically on Dec. 2. I'm not sure why it didn't publish, but I wonder if I didn't get the calendar setting wrong and maybe it thought I meant Feb. 12!
Meanwhile, I've got a cold. It started last Thursday, with a little tickle in my throat -- the famous post-nasal drip. I have now learned that taking the anti-cold medicine that stops the dripping was probably the worst thing I could have done. It seemed to be working for 3 of the 4 days, but by the 4th day I started coughing anyway. It's a horrible cough. On Monday, I went to the doctor and I've got full-fledged sinusitis and the cough with an antibiotic. I should have just let the cold develop normally at its own pace. On the bright side, I've lost some weight!
Monday evening there was an AARO meeting. The theme was Inheritance in France, but because France and the US signed their inter-governmental agreement on FATCA, we added that to the meeting agenda. It was a great meeting, with a good audience turnout, and the summary of it should be up on the AARO website, soon, I hope. There should also be a video of it.
Our street is all dug up. They are preparing to put all the telephone lines underground. Would you believe that when we bought this house almost thirty years ago, we planned for the soon-to-come underground lines by putting in cable tubes? Unfortunately, in the 30-year wait, they got plugged up and are not where the phone company wants to actually enter the property, so we'll have to dig up another part of the front yard next year when the cables finally are scheduled to be laid. There will be two cables: phone and fiber optic, so we should get really fast internet service, too. As a bonus, the street will be completely resurfaced, not just patched up. That sounds great, but we reminded the city that the water company had come through last year to tell us what we had to do to prepare for the new dual sewer system (one for used water, one for rain drain-off) and that they were supposed to dig up the street in 2014! It's a shame our newly resurfaced street won't last long. We're sure the sewer work will get us patches, not a completely new surface. Maybe they'll do the sidewalks, though!
We're getting ready for Christmas. We'll probably get a tree at the end of this week. We'll have the family, minus the English branch, this year. They'll be celebrating at home and in Woking and we'll go up to them just after the new year.
That's enough for today.

Georges Braque exhibit at the Grand Palais

Just the week after we got back from La Réunion, Paul and I took in the Braque exhibit at the Grand Palais. It's one of those monumental exhibits, taking in all of Braque's periods. Therefore it is crowed. We went in the afternoon, after my stint at the library. That was not a good idea. I hope we get to go back, early some morning. I remember first seeing Braque at the Jeu de Paume, in 1970, when that was the Impressionists and early 20th century museum. I remember Claude's Tante Edith, our art history teacher for the semester telling us about the breakthroughs in art. Most of all, I remember Tante Edith's clasp, which I spotted on a visit to her apartment, and her telling me "Ah, oui, Georges me l'a donnée." And I took a closer look and asked, "Georges Braque?" and she sighed and said, "Ah, oui." Somehow, talking to someone who connected to the past was fascinating.
That was running through my mind as I went through the exhibit. Also, how much Braque and Picasso inspired one another. And how I think Matisse was inspired. Art is long chain of inspirations.
If you go, be patient; go early; take your time.

Simon Winchester was the Guest Speaker at the AARO 40th Anniversary Party

The anniversary party was two weeks ago, but since I haven't written in quite some time, it's time I said something. I think the party was a success; we had to turn people who wanted to sign up on the day away because we had reservations to room capacity limits. Alex H., the events chair did a fantastic job, not only discovering our speaker and convincing him to speak to us, but also in selecting an excellent caterer, and so on.
I don't know if you've ever read any of  Simon Winchester's books; I hadn't. He's a great story-teller. On Monday, at the party, he told us the story of how he became a writer. He had originally trained and worked for a while as a geologist. As story-tellers do, he went off on little tangents to highlight points in his story and then came back to it. I think we were all enchanted. He is not a fiction writer, but the protagonists in his stories (and in The Meaning of Everything, he goes into whether protagonists can be plural, or not) are frequently quite extraordinary, if not totally eccentric, people. Someone in the audience, who was quite familiar with his books, asked why. He preferred not to give us a complete explanation then and there, but rather pointed us to his e-book, The Man with the Electrified Brain. It was published just this year, and it's very short and very inexpensive. (I bought the Kobo edition for under €1.60.) It's autobiographical, so it covered much of the same territory as his talk, with fewer tangents and more detail. I enjoyed it. For me, it was preparation to the joint AARO-ALP (American Library in Paris) event on Wednesday.
Wednesday evening, then, Winchester was the guest speaker at the American Library. AARO sponsored his trip, so we were privileged co-sponsors of the event and had a table at the entrance. What I discovered was that many, many of the Library patrons are already members of AARO! So, I changed the tune a little and asked these members, who are mostly retired, to get younger recruits, including their own children, who are Americans, affected by American laws (tax law, in particular), whether they live there, or not, and who need to become involved. (Hint to my own children!)
Winchester was there to talk about his just-published book, The Men Who United the States. He started out by saying he was sorry there weren't women in the story, but there just aren't. Then he spoke about what is really important in writing a book, any book: the idea, first; then, the structure; and last, the writing. He spoke about the structure of this book and how he could tie in the trails, the waterways, the rails, the roads, radio and internet networks. He based it on the five elements (according to Chinese culture): Wood, Fire, Earth, Metal, Water. I'm anxious to read the book to find out just how he did it.
In the hope that he writes stories as well as he tells them, I took out a few of his books just before the meeting: The Professor and the Madman (The Surgeon of Crowthorne, in the UK); The Meaning of Everything; and The Map that Changed the World. I have now read the first one and am in the middle of the second. He is a good story-teller, but I think that perhaps there is too much overlap in the first two books to be reading them one after the other so soon. There was a ten-year gap in his writing them, so one should leave a gap in reading them. They are both about the Oxford dictionary. The first is about the madman, Dr. Minor, and the editor of the dictionary, Dr. Murray, with a lot of background on the dictionary, itself. The second is the story of how the dictionary came into being, from the idea, through the first editors before any publication, through to the time this book was written. The background story of the first book becomes the subject of the second and there is quite a lot of repetition. I'm skimming through this part, but I've allowed myself a pause to finish a knitting project and to read a couple of new Anne Perry books and the latest Dan Brown -- all rather disappointing, so now I'm back on the Winchester track.