Geneva, Switzerland (PRWEB) July 15, 2011
American Citizens Abroad (ACA), an organization of U.S. citizens living overseas, today released a new report showing how the Foreign Account Tax Compliance Act (FATCA) jeopardizes trillions of dollars of investment in the United States, and makes it difficult if not impossible for American companies and financial institutions to be successful in a competitive global environment.
FATCA legislation, which was buried in the HIRE Act passed by Congress in 2010, becomes effective in January 2013, only 18 months from now. But because its implications are so far-reaching and complex, the U.S. Treasury Department has not yet issued regulations on how to implement it, leaving banks, insurance companies, pension funds and mutual funds around the world in limbo as to how to put into place the onerous provisions of the new law.
“The goal of FATCA was to identify U.S. citizens with undeclared assets hidden in overseas bank accounts,” said Jackie Bugnion, ACA Director. “Although ACA applauds this goal, the way this new law is structured is totally disproportionate and unworkable— the equivalent of using a bulldozer to destroy an anthill.”
The full report entitled, “Why FATCA is Bad for America and Why It Should be Repealed Now!" may be viewed by clicking: http://www.aca.ch/fatcapp.pdf
ACA is working with a coalition of partners to oppose FATCA including the National Taxpayers Union (NTU), various American Chambers of Commerce and banking trade associations. “If truth in advertising laws had to apply to Congress's handiwork, the term ‘FATCA’ would stand for Full of Adverse Tax Consequences for Americans,” said Pete Sepp, Executive Vice President of NTU. “Ironically, as a bigger chorus of policymakers calls for a ‘repatriation window’ to bring overseas financial assets back to the U.S., FATCA would have the effect of chasing those assets away from our shores. NTU is proud to stand with American Citizens Abroad and a growing number of allies to repeal FATCA and restructure our flawed tax system.”
Under FATCA, any institution in the world that holds U.S. securities must declare all U.S. account-holders directly to the IRS, or prove that none of their account-holders or investors hold U.S. passports. If the institution does not report this to the IRS, it faces a punitive 30% penalty on any transaction in those U.S. securities. FATCA creates an administrative nightmare for banks overseas, and a double reporting burden on both American businessmen operating abroad and overseas American residents who must have foreign bank accounts to function.
The law has already had highly negative consequences for the United States and its citizens overseas, even before it has gone into effect. Some banks overseas have closed the accounts of U.S. citizens, and have sold off all U.S. holdings, rather than comply with the heavy administrative burden of FATCA. ACA points out in the report that foreign investment in the U.S. currently exceeds $21 trillion. The sale of even part of these holdings would have a devastating effect on U.S. markets, and consequently on jobs in the United States, on U.S. exports, and on the U.S. economy overall.
Because most Members of Congress are unaware of the unintended consequences of FATCA, ACA is urging individuals to write to their Congressional representative asking that they repeal this flawed legislation. Information on how all Americans at home and abroad can send their letters to Congress- along with a sample letter- may be viewed on the ACA web site at http://www.americansabroad.org
American Citizens Abroad (ACA), the voice of more than 5.2 million Americans overseas, is a non-partisan, non-profit association of volunteers based in Geneva, Switzerland, with worldwide membership in over 90 countries. ACA has represented the interests of American citizens residing overseas for more than 30 years on issues ranging from banking and taxation to voting registration. For more information, visit http://www.americansabroad.org