From the National Center for Policy Analysis:
In just a few months, the Foreign Account Tax Compliance Act (FATCA) will go into effect to attempt to deal with Americans living abroad who owe taxes to the federal government. But as it stands now, the Report of Foreign Bank and Financial Accounts (FBAR) is the law in operation, requiring Americans with foreign accounts of $10,000 or more to report the account’s highest balance to the IRS every year.
The 2010 law requires all non-U.S. financial institutions to provide the IRS with detailed information about American account holders. If they do not, they could face severe penalties. FATCA is designed — using a controversial dragnet-like method — to catch those Americans thought to be evading taxes by hiding their wealth in foreign bank accounts. The way FATCA does this is by requiring that all non-U.S. financial institutions pass along detailed information about American account holders, or potentially face steep penalties, says USA Today.
- Six million Americans live abroad, yet fewer than 1 million of them regularly file tax returns.
- The IRS estimates that they owe somewhere between $40 billion and $123 billion in unpaid taxes.
- In 2013 alone, 3,000 Americans renounced their citizenship, a 221 percent increase from 2012.
- In 2008, only 231 people renounced their U.S. citizenship.
- A financial consultancy firm, the de Vere Group, conducted a poll finding that 68 percent of expatriates have considered giving up their American citizenship because of FATCA.
Read more: NCPA
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