Americans living abroad feel that the Foreign Account Tax Compliance Act negatively impacts their professional lives and that compliance with the related tax reporting requirements is overly burdensome, a survey by Americans Abroad Global Foundation and the University of Nevada has found.
But most survey respondents believe the U.S. government is not concerned about the impact FATCA has on its citizens who live overseas.
FATCA demands that U.S. taxpayers report information about their foreign financial assets and bank accounts in addition to the already existing requirement to report foreign bank and financial accounts (FBAR).
Penalties for failing to file the disclosures are high, ranging from $10,000 to $100,000, or 50 percent of the account balance for FBAR violations.
“The new rules, and their interaction with existing law, have created confusion and consternation among many U.S. taxpayers,” the survey report said. “In addition, significant numbers of taxpayers have been faced with situations where banks and other financial institutions either closed their accounts or refused to open accounts for them.”
More than three-quarters of respondents said complying with U.S. tax laws puts them at a professional disadvantage compared to others working in their country of residence.
Also, 86 percent of U.S. expatriates said that FATCA needs to be reworked to allow Americans overseas access to banking services and include a “same country exemption” provision, which would exempt from reporting those accounts that are held in the country where the taxpayer lives.
Overseas Americans generally felt the Internal Revenue Service was not keeping them informed about how to comply with evolving tax laws. Nearly two-thirds stated they strongly disagree with the statement that the U.S. government is doing a good job of keeping them informed.
Sonja Pippin, associate professor in accounting at the University of Nevada said, “The consensus from this sample of Americans abroad feels that the U.S. government does not recognize how the FATCA legislation is negatively impacting them, limiting their ability to maintain legitimate banking and financial relationships and, that in many respects, simply does not care how the legislation is affecting a community of law-abiding citizens who have chosen to live overseas for work or personal reasons.”
More than 80 percent of respondents noted that U.S. tax laws are more complicated than the tax law in their country of residence, and that U.S. tax laws had become even more complicated in recent years.
Americans living abroad generally expressed in the survey that they did not consider tax evasion to be a big problem, but agreed that some control and efforts to combat tax evasion are necessary. However, only 12 percent believe new legislation is needed to achieve this, and 84 percent do not think FATCA is necessary to prevent tax fraud.
“These survey results are important,” said Charles Bruce, ACAGF chairman. “They will be used as a baseline for informing the public, creating educational programs and advocating for legislative changes to address the issues of Americans abroad.”
He said the survey results indicate that Americans want to comply with tax laws but want sensible simplification of the rules, including a “same country” provision. They also demand more outreach from the IRS on how to comply, and they “want to vote for representatives who understand their issues,” he added.