OAW - Some personal thoughts

Here we are, the week has flown.  It's really time to write an update.  Aside from seeing our own Representatives' and Senators' offices, most of our meetings were concentrated on the tax and banking staffers of the tax, finance, and banking committees. We have also seen the National Taxpayer Advocate's staff, the Joint Committee on Taxation, Treasury,  and two of the Senate Banking Committee staff.

Will there be comprehensive tax reform soon? Unlikely. Just as residence-based-taxation is a concept that certain offices find attractive,  the consensus is that its time has not come, yet. It seems ingrained in American exceptional-ism.

Will FATCA be repealed? Well, Senator Rand Paul introduced a bill on Wednesday that would repeal at least some sections of FATCA, the sections that are an invasion of privacy.  John and Lucy met with Rand Paul's FATCA expert on Tuesday and were very impressed by him. In any event, as John says, the train has left the station. Many other countries have jumped on the FATCA bandwagon, so whether you call it FATCA or something else, automatic exchange of financial information will happen worldwide and, according to the people at Treasury, the discrimination will stop.

Could FATCA be tweaked to allow the “same country exclusion”? For the first time since we started talking about this idea (this is my third year and it was on the agenda before I started coming to DC on these OAW campaigns), it has been suggested that our local banks might not agree with it as it puts a burden on them to certify our “bona fide  residence”. We need to find out.

Can the threshold of the FBAR be raised? Who would be responsible for that? Treasury? Congress? It's a hot potato.

We are visiting the right offices. They appreciate our positions. They want us not to give up.

And what about bank discrimination on the part of US banks and brokerages against Americans with foreign addresses. Is it FATCA related? Does it have something to do with Dodd-Frank? The S.E.C.? We have never gotten an answer from the banks and brokerages. Can the Congressional offices get answers?

We do sometimes manage to slip in some of our other issues: raising the threshold of exclusion for social security income, for example, but this year is really dedicated to the tax and banking concerns.

What's next for AARO? We need to collect documentation that FATCA is the cause of discrimination against Americans with foreign accounts and we need to get documentation explaining the reason for US financial institutions discriminating against Americans with foreign addresses. We have the documents that show the discrimination, but very few say why. Send documents to banking@aaro.org. 

Trying to get back to the rhythm of posting

I know I just posted a spurt of several posts, but I really should get back to the rhythm of posting every two weeks. My calendar reminded me that this week was one of those weeks, so I may as well write.
I haven't written about FATCA and all that headache for some time. To be frank, I'm sick of the subject. I'm waiting for my banks (two) and other financial institutions to get in touch with me to send them the W-9 form. And I'm waiting, and waiting. I have no qualms about giving them the W-9 form; after all I've been declaring these FFIs (foreign financial institutions) all along. The accounts will not have to be reported by the FFIs, anyway, since they do not hold the threshold declaration amounts. Some banks are on the ball and have filtered their customers, either by asking them directly if they are US persons, or by mining their customer data for birthplace information or other indications of US personness. Mine, apparently, have not.
Some institutions have eliminated US persons from their clientele; that's their way of being compliant -- having nothing to declare. It's all very weird and a lot depends on the country of residence, too. The result is that the backlog of Americans living abroad waiting for appointments to renounce their US citizenship is reported to be so long that the next available appointment in Toronto, for example, is in mid-2015. That is in spite of the renunciation fee having gone up from $450 to $2350. Some say that it'll just be even more expensive down the line.
Most of these people are not tax evaders. They pay their taxes. Many are accidental Americans, unaware of their US citizenship and the declaration obligations until now.  Many are dual citizens and want to be able to live as normal citizens of wherever they happen to live (and have citizenship). They want to be able to get a mortgage (denied to US persons and their Swiss spouses in Switzerland), have the standard retirement plans in their country, and so on. US citizenship has become a burden. Many US persons are not even citizens; they may be people who lived in the US at one time and have a greencard.
Now, something that bugs me, personally. I don't have a US checking account. That was denied me because, although I am a citizen, I don't live in the country. With my old Fidelity account, I had check-writing privileges, so that was not really a problem. But Fidelity, along with all the other brokerages, changed the rules and even if I still have check-writing privileges, I cannot trade, so I no longer have much money in that account. I have moved to another brokerage that allows trading (a good thing for a brokerage to do, I think), but does not accord check-writing privileges. It  had enough cash at hand without needing me to sell anything, so I wanted to deal with my last IRS estimate from this account. Like a child, I had to ask my asset manager to please take care of it before the end of 2014, rather than in January. So, why not now? And he took care of it. But the firm used overnight delivery for $20! It's not due until mid-Jan. 2015. It did not require overnight delivery! I do not need to spend an extra $100 each year for the delivery of my estimate checks and the final amount due! The explanation was to make sure it got there. I think that the appearance of the deduction in the account takes care of that. And if it doesn't show up, then we can worry. We have time.
'Nuff said.
We babysat last week. Sacha is wonderful to listen to. We can understand more and more and he's even trying out some English with me. Chloé is growing soooo fast. (I better update the family pictures to share!)

Yikes, it's been a whole month!

Last night was my birthday treat! Yes, back in February, I was given a voucher for the Joan Baez concert, the last in the series, for October 7. And we didn't forget; we didn't get the date mixed up. It was wonderful. She's wonderful. Still wonderful. The first time I saw her in concert was in Los Angeles, when I was at Pitzer. It must have been in late '68 or '69. Then, in 1980, she gave a concert in Nogent sur Marne at the Pavillon Baltard, to which I strolled over with Rosette. A few years later, Paul and I saw her at the Palais des Sports at the Porte de Versailles in Paris. And now, the Olympia.
We had to leave England after a very short weekend visit to celebrate Constance's first birthday! We drove up there on Thursday and back home on Monday. We got to see everyone, but it was too short a trip. And I've got another super trip to the States coming up in November.
On Monday morning, I missed an important AARO breakfast meeting with Senator Mike Lee and lawyer, James Bopp, who are drumming up support for the anti-FATCA litigation. This meeting was not a fund raising event, but it was to inform us about the litigation. Luckily, Victoria attended and has published her report.
Family -- I'll try get some family photos up on line and will send you the link.

OAW - final

The other evening, coming back from the FVAP meeting, I devoted the entire post to voting from abroad. I didn't mean to ignore Treasury and the American Bankers Association. Those were important and interesting meetings. We talked about bank discrimination, both on the US side, which seemed to surprise the ABA people, and on the foreign side, due to FATCA. From both meetings, we took away the impression that our problems are understood. There is sympathy. There is understanding. But FATCA will not go away. The idea of excluding the accounts in our countries of residence is interesting, but will not come about immediately, if ever. Somehow, the discrimination we are experiencing will go away when all the countries in the world are exchanging bank information with all the others. There will be no need to single us out! I don't like the sound of that, but I see the logic. As nice as everyone was, as sympathetic as they were, I still wonder what I'll end up doing.
This is the Alexander Calder sculpture in the Senate Hart Building.

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?

In the Economist

I'm so glad that the FATCA, banking, tax dilemma has hit mainstream media recently. The most recent article is in this week's Economist. I got mentioned, about the Fidelity (and other brokerages) behavior. Most of the comments are excellent, too.
Today, I'm in Philadelphia to meet a bunch of high school mates. As I've said many times before, I can't really say "reunion" because I feel as though I'm meeting most of them for the very first time. We've been having a great time getting to know one another on Facebook these past 4 or 5 years, though, so I'm looking forward to this lunch.
Then Jon is driving in, and I'm looking forward to having dinner with him, and with a bit of luck, Eric, too, and maybe a couple of Tobi and Jon's friends. I am sorry Tobi can't make the trip this time. I even got to see Tony and Barbara on this short, short trip, as they were so kind to arrange to be on their way home from a trip to Boston and New York. I had (stupidly) gotten myself a ticket to New York, rather than Philly. I got in three hours late because of mechanical problems that held up our flight in Paris. The shuttle into the city took about twice as long as expected, so we got caught in Friday rush hour traffic down to Philadelphia. The upside of that is that it gave us more time to talk!
I'll write more about this reunion in another post, later, maybe on my way back, tomorrow.

Here I go again -- FATCA

Okay, if you are sick of hearing about FATCA from me, just stop reading this post, now. You might want to read a really nice post about Bastille Day and see some remarkable pictures: arunwithaview.wordpress.com

This is not about the US and FATCA. The US has created a little wagon and that is growing into a train. Let me add that the wagon is a bit of a runaway, so that the others that want to hitch on to it are going to have a hell of a ride. While there is starting to be some debate in the US about getting rid of FATCA, on this side of the ocean, they starting to think that the US may be on to something and "we" should do it, too.

TS, one of the people I met up with in Brussels a couple of months ago, sent me these links to some videos he found:  http://www.youtube.com/watch?v=ATyHzS6MEfY and http://www.youtube.com/watch?v=xtDroiW9k4I. Sorry, but I can't seem to get the link to work to embed the videos.
TS wanted to know what they were saying. They're in French, not English. So, I watched.
Between the solid lined is the body of my email to T:
________________________________
Before getting on to what they said, I did some very quick research into who the speakers are:

• Mathilde Dupré is the moderator of the first video is a member of Europe Ecologie Les Verts (EELV), (no longer)* a deputy in the French Parliament, member of the Finance, General Economy, and Budget Control Commission. At the  CCFD-Terre solidaire, a leftist-Catholic association, Mathilde Dupré is the lead in pleading against fiscal fraud.
  * I mis-identified her as a currently a deputy in my email.

• Éva Sas is also an EELV deputy, member of the Finance, General Economy, and Budget Control Commission.

• Pascal Cherki is a deputy, member of the Parti socialiste, and member of the Commission des finances 

• Marie-Noëlle Lienemann is a member of the Parti socialiste, a senator and former member of the European Parliament. She is currently attached to the EELV

• Nicolas Dupont-Aignan is president of Debout la République, a gaullist party, and he is co-president of the parti européen UE. He is a deputy.

• Jean Merckaert is the moderator of the second video. He is editor-in-chief of www.Revue-Projet.com, previously with : 
• CCFD-Terre Solidaire, 
 
• FICONPAZ. Within CCFD 
 (Comité catholique contre la faim et pour le développement) he pleads for financing developing countries and in that role is a leader against fiscal paradises...

• Serge Colin is the head of the union of tax agency employees (secrétaire général du syndicat national unifié des impôts (SNUI)).

• Antoine Peillon: is a Journaliste at La Croix,  was formerly at Le Monde, La Tribune, Le Figaro, InfoMatin, Le Point, L’Express, VSD, La Vie, Terre Sauvage, Grands Reportages. He blogs on Médiapart: blogs.mediapart.fr/blog/antoine-p…
  http://www.dailymotion.com/video/x11i6ht_audition-m-antoine-peillon-et-m-fabrice-arfi-par-la-commission-d-enquete-contre-la-fraude-fiscale_news#.UeObg9JM_q8

  http://www.mediapart.fr/search/apachesolr_search/FATCA

Video 1
MD opened with announcing there is confusion between what the US is doing and the rest of the world. She went on with a summary of what FATCA means -- collecting the bank data on US "ressortissants", both individuals and corporations (which we know means US persons). She then said there were differences between those countries that signed IGAs and those that have not. For the most part, discussions are about how to comply and or reach an IGA, not about implementing their own comparable legislation. Considering how hard it has been for the last 10 years to get Luxembourg and Austria to agree to current EU data sharing, she hopes that FATCA will bring them around. Her conclusion is that France be a leader and should enact its own version of FATCA as a step towards EU law, not wait for the EU to act first.
ES said the the EELV had come up with such a law proposal but that the government has amended it to say only that if the EU enacts such legislation, it would apply immediately in France. She wants France to enact first, because FATCA is a model and has shown it is possible and that it is time to stop the "laissez-faire" attitude that allows frauds to wait out.
PC emphasized that the US is the biggest market, so it has great clout because no one wants to be excluded. And the US has its own fiscal paradise: Delaware. He said the US was right to do FATCA the way they are, but that here there are difficulties to such an approach. He said that LU, CH, AT will come around, but the City (UK) remains the 1st offshore platform in the world and will not. So, we need to work on EU consensus and start it here (in France) first. He thinks working on public opinion will be effective in the long term in the UK.
M-NL thinks we need a French law and the Senate has started the process of thinking it out. Bercy (French finance ministry) is against France taking action as it would necessitate the renegotiation of every bi-lateral treaty (so she says, better to get started now, then). She says we (FR) could start with selected countries: those with which agreement is mostly guaranteed and those with which France can apply political pressure. She said we could and should do it. We have the means (secret services and current data sources). We can start also within the EU with "coopération renforcée" (enhanced cooperation) among a few EU countries.
NDA is also in favor of French enacting a FATCA-type law. And doing it first, because he does not think there is a need for an EU law. He is astonished that the French administration is contemplating an IGA with the US that does not guarantee reciprocity. If that is the case, it should not be ratified by parliament. (MD said that France foresees a reciprocity IGA, but with the knowledge that the US is not ready to comply.) He also suggested that France could use the same leverage (no access to our market) rather than judicial debate...
------------------------
Video 2
JM opened with the question: why don't we do the same?
SC said, of course, we can. France, alone, might be too small, but in conjunction with others, why not? Rules and procedures will be necessary for data protection.
AP said that there is a need for safeguards, but the info is already there, already collected for police enquiries, not for general fiscal collection. He said, though, that trusts remain opaque and that many frauds are outside the commercial banks, in private, "family" banks in Jersey, Guernsey, etc.
----------------------
My take:
No matter how much we might want to see FATCA go away, it won't. Even if the US turns against it, the cat is out of the bag. It'll grow into a global monster. I might not want it, but, actually, as a compliant taxpayer, I can live with it -- as long as discrimination against me is not allowed. As the case stands, now, there is discrimination.
I'm of a mind to write to the people who spoke in these videos. For them it's about banks and frauds, not about real people. Also, where the US wants info on its "persons", every other country is only interested in its "contribuables", taxpayers, who, based on residency-based-taxation, do not include their citizens who live outside the country. (But then, I am a pessimist on that count, too, as I think some countries consider the US system of citizen-based-taxation to be something to aim for! I know François Hollande does!)
_______________________
After all that, I then wrote to those deputies and senator and pleaded for them to consider the average expat/immigrant, who is not a fraud, who is simply living and working in a country, who is not really the target of FATCA. I asked that if they are really considering such legislation, that they think first -- something the US Congress neglected to do. That if France signs an IGA, that it hold off enforcement until the US can assure reciprocity. That they insist that financial institutions in signatory countries not be able to discriminate against nationals of those countries, and have due recourse in case of discrimination, that they define "foreign account" so that accounts in the country of residence not be considered "foreign". 
But let's face it. I'm sick of writing to senators, deputies, representatives here, there, and everywhere. I'm sick of writing about it to you. I'm about ready to give up.
And that's it for today. It's a beautiful day. Here's that link, again, to that nice post about Bastille Day and great pictures: arunwithaview.wordpress.com

FATCA related links and my distress

If you use twitter, you can follow @FATCA_Fallout for continuous updates on the subject. I'm not a great fan of the Isaac Brock Society, to which he frequently links, but as a friend said the other day, by comparison, our organizations look so much more reasonable.
My own problem with FATCA is not a tax issue. I am quite conscientious in reporting my accounts and filing my returns in both countries. I would prefer the simplicity of residence-based-taxation, though, that would eliminate the need to report to the US. My problem is with the financial institutions' discrimination against US persons (citizens and greencard holders) both in the US and abroad. Some discrimination is old and tied to mis-interpretation of the Patriot Act by US banks, but most of it is recent, tied to FATCA, I believe.
This discrimination could lead to the conclusion that, in order to live "normally", I would give up my American citizenship. I would hate to feel that is what I have to do, and the kids, too, should do! And now there is the added threat that, if I (we) were do take that step, it would be interpreted "for tax reasons" and could prevent us from ever re-entering the US, even for visits. Yes, that is what Senators Schumer and Casey are proposing as an amendment to the immigration bill.
Anyway, here are just three of today's feed from @FATCA_Fallout:

How Delaware Thrives as a Corporate Tax Haven http://t.co/Adxp3D7tbF Won't thrive any more after G8 announcement on ending Tax havens
— Marvin Van Horn (@FATCA_Fallout) June 20, 2013

Despite commitment 2 a reciprocial FATCA regime, IGA approach ignores a underlying inconsistency-Citizenship taxation http://t.co/ywFf6DSAFB
— Marvin Van Horn (@FATCA_Fallout) June 20, 2013

#FATCA: Toward a Multilateral Automatic Information Reporting Regime http://t.co/OLkr0nH7Bs But have to end Citizenship taxation first!
— Marvin Van Horn (@FATCA_Fallout) June 20, 2013

The videos of the meeting in Brussels

Victoria got online before me. I did manage to ok the comment on yesterday's post that had this link, but now, for those of you who did not look at those comments, here is the video conference, part 1, with our hero, Sophie in 't Veld, in the preview photo. Her intervention starts at 39 minutes. There's a little bit at the start that was translated, but bear with it; it goes back to all English:



and here is part 2:

Spring in Brussels

Yesterday, I attended the EU hearing on FATCA, on behalf of AARO, in Brussels, with Victoria Ferauge, B.J., and M.E. Apologies for not letting Brussels friends know that I was coming. I didn't know, either, until late last week and once it was decided I'd go, I knew that it would be a packed day with no time to meet up or call.

First of all, you can also read about our day from Victoria's perspective on her blog, The Franco-American Flophouse. I really recommend her blog for the variety and interest of her subjects and her excellent writing.

Victoria and I were both traveling from Paris to Brussels and I managed to get on the same train and into the same car, so we sat together and got better acquainted. We'd already met once last year at the library. I'm always amazed at how little time it takes -- less than an hour and a half. I had a scare on my way to the station, though; the RER A was having one of those days of slowly limping from station to station and then sitting in the stations for a while. I was afraid I'd be late. But I wasn't and we had a good trip.

We got to Brussels, hopped into a cab and were delivered to the restaurant, where one of our little group was already waiting for us. He's also a dual national, living in Scandinavia. Surprise! The weather report for Paris was for more cold and rain and we are so used to that now that the sun and warm temperatures were almost a shock. We ate outside on the terrace! And we ate well, in case you're interested: Pasticcio.

The EU hearing on FATCA was scheduled for 3:30, so we had plenty of time. The Altiero Spinelli building is imposing, modern and the plaza in front of it is hosting a beautiful photo exhibit. What on earth inspired us to scout the area and find out if there was any particular procedure to get in? I have no idea, but we were well-inspired. It turns out that a meeting open to the public does not mean that J. Q. Public can just go in and sit down. You need an escort to get into the building. And we discovered that wifi access was not as easy to find as we thought. M. found the phone number of the MEP Victoria had been in contact with, Sophie in't Veld, MEP from the Netherlands. My phone to make the call and Victoria, as the one who had been the contact person, speaking, we got through to Emily, who immediately called us back to tell us to meet her at the entrance. I imagine we were interrupting her work, but if we were, she did not show it. She and another staffer, Thomas, took us to the registration office, got us our badges, and escorted us into the building and all the way to the meeting room in the most friendly and welcoming way. If you are reading this, Emily and Thomas, you should know how your taking care of us made us feel so welcome. Thank you.

So pampered, we were there early enough to choose our seats. There are only about 20 "public" seats in the room and once the meeting started, it was S.R.O. The official attendees straggled in, but Sophie in't Veld was early enough for us to be able to introduce ourselves to her and chat. Lucy Laederich, president of AARO and US Liaison for FAWCO, had sent her a letter earlier and although there will be more in our report, I can say here, that in the hearing, it was obvious that she took it to heart.

B.J. arrived a little later. She had been delayed by the procedure to get in. I have since learned that another AARO member came, but was not able to get in. If only we'd known that he was coming, we could have gotten him in with us.

The hearing was streamed on the Internet and, from comments, it looks like it was OK. I think this is it - it seems I don't have the proper extension on my browser to watch. Here's a briefing describing what's going on, so far concerning the US and the EU on the FATCA front.

After the hearing, in the hall outside the meeting room, we more or less ran into some of the participants at the meeting and were able to chat with them. This was exciting because they were truly interested in learning how EU citizens, not just banking institutions, were being affected, because of their dual nationalities or partnerships with Americans. There is a real problem of discrimination that they had no idea of. They also gave us good tips to contact other important MEPs and EU commissions.

We had time for a short, informal debriefing around a beer or a coke and walked a bit before catching a cab back to the station. It was a good thing we had our jackets, because the bad weather did come to Belgium, although we did not get rained on too much. On the ride back to Paris, we learned that the wifi access on the train is not all it's cranked up to be.

Calming down - but not completely

I've had a few conversations with Fidelity reps in the days since I got that horrendous phone call. They all repeat that this is the new policy. I haven't received any letter. My kids, who also have similar accounts, have not received telephone calls or letters. I asked if, perhaps, the new policy had been rescinded, but was told that no, it had not and that my letter had gone out on May 9. Well, it's the 22nd today and I still don't have it. I have made some suggestions -- that such important letters that indicate tremendous changes to our accounts should be sent out be registered mail and the clock ticking on the new policy should not start until the date received, not the date sent, that changes to the welcome page on the website that require you do accept or decline should allow you to see the options of what happens if you decline before you actually click the button, not once you have clicked. (Really bad website design!) I did not click; I called and asked what the options were, and since the international options are not available to US citizens, of course, I ended up clicking the "Accept" button.
I've been following an excellent blog, The Franco-American Flophouse, and its author, Victoria Ferauge, is a much better writer than I am, much more articulate, a journalist, really. She has been writing about all sorts of subjects, which I'll let you discover, but one of her pet peeves, like mine, is US tax law concerning residents abroad. Today's post announce a meeting in Brussels on the EU and FATCA next week. I won't be able to attend, but if any of my readers are able to, I strongly recommend attending.
No other news of great import. It's been raining a lot, but it looks like today may be nicer. Sacha is growing. Claire and Geoff are weeding through girls' names and it looks like they've settled the matter, but I'm keeping mum until the baby is actually born. Anne is home for a few days between Prague and a visit to England with a couple of days in London at the end. Emma is off to Switzerland for a few days. Paul and I are finished with our bad colds, although he's still a bit congested. I'm still trying to scan a few photos a day to finish reproducing our old albums. I'm up to 1997 and from 2006, we already have the newer, printed albums, so with less than a decade to go, I hope to finish this before the end of the year.

Ranting and Raving Mad - Second Class Citizenship

I am not a tax professional. I am an active member of AARO. As an active member, I was privileged to participate in Overseas Americans Week in February 2013.
If what I write below is erroneous, please send me a comment so I can correct it.

Let us start with FATCA and take a cool-headed look at how FATCA affects us US citizens (and non-citizen US taxpayers).

Depending on Intergovernmental agreements (IGAs), or their absence, foreign financial institutions must declare, to their government or directly to the IRS, the existence of your accounts and the amount in them. For bank accounts, they will not have to report holdings under $50000 and for other investment accounts, amounts under $250000. We, however, may be required to report these accounts, even if the banks do not. That depends on the total amount in our accounts and our filing status.

Single or married filing separately. If the total amount in all the accounts outside the US is not greater than $200000, then we do not have to file form 8938. If the total amount in all the accounts outside the US is greater than $10000, we must file form TD F 90-22.1 (the FBAR form).

Married filing a joint return. The threshold for form 8938 is $400000. For the FBAR,  it's still $10000.

So much for the filing requirements, which are simplified, here. If there is an exceptional short-term deposit which carries the total amount in the accounts above the threshold, there are other dispositions, and these are covered every year in the AARO tax seminars.

Many Americans abroad do not have to file form 8938. They do not have such savings abroad. That does not mean that FATCA has not affected them. It has made opening or maintaining accounts in the countries in which we reside difficult, if not impossible, because banks are reluctant to hold these accounts that will create such expensive reporting requirements, and in some countries, these requirements are contrary to local law on privacy. There has been a modification to the FATCA rules that requires banks to not discriminate against US persons, but it is not clear how that rule will be enforced. If you live abroad, either full time or part time, and you need a local account, FATCA has affected you.

Many Americans who live abroad do not have significant savings abroad because they have maintained an investment account in the United States. Now, US brokerages are closing or restricting accounts held by US citizens with foreign addresses. There's no law telling them to do this; it's their new policy. Policies from one brokerage to another are not consistent. The closures or restrictions seem to depend on the country of residence. There's no clear explanation, but it looks like it may be linked to which countries have entered an IGA with the US about FATCA. If any of us were thinking that we were lucky not to have to deal with the FATCA business because our money was still in the States, we are now stuck.

I'm going to skip the long diatribe about how the FBAR and FATCA filings affect us finding jobs, creating companies and partnerships, taking on responsibilities with associations -- anything to do with our having a signature on a bank account. Short story -- negative effect.

What are we to do? Where are we supposed to be investing our savings? How?

There is a second issue. Some Americans who live abroad do not have bank accounts in the US. Either they have never lived in the US, or they left and closed their accounts when they realized they would be residing abroad indefinitely. Since the passage of the Patriot Act, banks have refused to open accounts to US citizens who do not have a local address. This is not part of the law, but it is the policy based on the “know your customer” requirement. It is discriminatory. The workaround solution is to claim residence at parent's, sibling's, or friend's homes. In fact, the bank clerk might suggest this solution. In effect, they will know you to be a liar and that is okay. I have never done this. To claim one address to a bank and then another, foreign address, to the IRS, seemed hypocritical.

I have lived in France for over 40 years, having married a Frenchman while still a student. The money in the States has its origins in the States, from my very modest saving account and  mostly thanks to the success of my parents. It is not money that was earned in France and stashed in the US. Likewise, the savings my  husband and I have here in France originate here, our savings. I closed the checking account as I no longer used it; that was a mistake because when after my mother died, it would have been easier if I had a checking account, but I couldn't open one. (Well, the clerk did suggest I use a bogus address and I balked since the reason I could not use my French address was the "know your customer" rule!) The investment account is my sole account in the US.

Is it the intent of US financial institutions that we remove our funds and import them to our country of residence? I could do that. And I suppose, that over time, that is what will happen. Can you imagine what life would be like for US citizens who move from country to country (for work)? If they have not maintained an address in the States, they no longer have a home base.

My own dilemma is Fidelity Investments phone call this week warning me that I would be receiving a letter with the details of the new restrictions on my account: I can sell, but will not be able to buy securities. I will not be able to deposit new funds to the account. My investment account, in effect, over time, becomes a cash account in which I will only be able to withdraw funds, to my understanding. My children, who have accounts at Fidelity, are in the same predicament. The restrictions are linked to our living in France. What has France done, or not done, to warrant US financial institutions treating US citizens like this?

Please, do not imagine that money is my sole connection to the US. No, it is not. I still have family and I still feel American. I am proud to be an American. I am sick of America making me feel unwanted. I have been a member of AAWE and AARO, organizations that fought for our rights to transmit our citizenship to our children and grand-children and to vote, fought for more reasoned thought into how we are taxed by the US. I am sick to find myself telling my children it might not be such a good idea to burden their children with US citizenship.

Can financial institutions in the US have such discriminatory policies? Is it legal? There is no law, it seems, that imposes these policies; it's the instituion's new policy; like it or leave. But leave for where, since all the institutions are doing this? And at what cost. If I had to sell all my mutual funds and stocks in a single stroke, I'd have excessive capital gains taxes.

As I noted at the beginning, I am mad. My discourse is not as well-organized as I'd like it to be. I have already written to my Representative, Chaka Fattah, to my Senators, Bob Casey and Pat Toomey, to Representative Carolyn Maloney, who is the chair of the Americans Abroad Caucus and the House Committee on Financial Services and who is also the sponsor of HR597 To establish a commission to study how Federal laws and policies affect United States citizens living in foreign countries. 

You can support HR597. You can write to your Congress people: If you, yourself, live outside the US, this letter. And if you are in the US and have family or friends who live abroad, use this letter.

And to give your opinion on tax reform -- in favor of RBT (Residence Based Taxation) for we who live overseas, consideration of accounts in one's country of residence as local, not foreign accounts, elimination of FATCA requirements that are strangling financial services.... Or maybe you disagree.