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Saturday, March 29, 2014

The Lay of the (Home) Land

"Just because you do not take an interest in politics doesn't mean politics won't take an interest in you."

Pericles (495 BC-429 BC)

Five days of constant motion and ever since we returned to the apartment last night I've been trying to organize my thoughts with an eye toward giving you my impressions, observations and conclusions.  Reading Steven Mopsick's post this morning I decided to use his thoughts as a springboard for mine.  

So, in no particular order, here are the things that a Washington newbie and American citizen fresh off the boat from abroad found interesting, encouraging and disheartening.  And, yes, it was a little bit of all those things.  I do want to say before I begin that the opinions and impressions that follow are my own and do not reflect the positions of the different diaspora organizations I work with.  On this blog, I own my own words.

1.  FATCA is not going away.  Even the people I listened to who hated it and might even have some clout if they wanted to work harder against it, are resigned to it.  It's gone too far and too much work has been done to make it happen.  Yes, there is awareness that it will be a "train wreck" and "chaotic" on July 1, 2014 but that is not going to be enough to stop it.  The most any one can hope for at this point would be a delay until the end of 2014 and the chances of that are slim.

2.  No Champions in Congress.  Today almost no one in Congress with the exception of Rand Paul will publicly go to bat for the people who are the eggs being broken in the making of the FATCA omelet.  And when I say "go to bat" I mean publicly defending the victims of FATCA or introducing laws to repeal or revise it.  Some of this reticence has to do with how the homeland public views Americans abroad - those champagne-swilling, yacht-owning residents of exotic lands- and some of it is the partisan nature of American politics which is leading to gridlock on any number of topics.  Asking these folks to vote for legislation on our behalf, be it a repeal FATCA attempt or trying to change to a residence-based tax system, is just about impossible right now.   

3.  Consequences Are Known.  What was encouraging is that almost everywhere we went people were aware of the banking discrimination and the renunciations.  The few who didn't know, we were more than happy to educate and they were horrified by the stories. I was at more than one meeting with people who had relatives living abroad and had heard from them directly about the consequences of FATCA.  Others had letters from constituents. Quite a few of them brought up the renunciations as well  and wanted more information about that.  

There was a great deal of sympathy on the part of the people we talked to in Washington.  Over and over I heard things like "disproportionate penalties", "collateral damage" and "you are being punished for the actions of a few bad actors."  But, frankly, most had no idea what could be done about it.  Repeal FATCA was clearly off the table and so they were struggling to find something that they could do.

4.  Mitigation.  As I said most were receptive to ideas that would address some of the worst consequences of FATCA.  The proposal to redefine "foreign" and exclude reporting on accounts located in the same country as those US citizens - like my bank which I pointed out was right across the street from my house and was certainly not "offshore" - was one that many thought was quite reasonable.  My understanding is that this would not require legislation and so it would be easier to do.

Another possibility comes through the IGA's  some of which have clauses that say that financial institutions are not to discriminate against US Persons.  It was pointed out that the IGAs have not yet been implemented and so one avenue Americans abroad have is to watch the host country legislative process carefully and jump in if we don't see those non-discrimination clauses included in the local laws that implement FATCA.

5.  Next Steps.  So where does that leave us?  What can we do at this point that stands a chance in hell of making a difference?

Letters:   Keep those letters to lawmakers coming.  If you have written before, write again.  They are receptive and if you don't get an answer, call them and insist on one.  It really does make a difference.

Media:  Give interviews to the media.  I was told in more than one case that after getting a letter from a constituent, the staffers went and looked for information on the Net.   The more articles (and the more recent the articles), the better.

Friends & Family in the US:  I heard more than once that the staffers and agency staff had a relative living abroad or who was thinking about moving abroad.  Ask your contacts back in the US to write or call.  I also noticed that some of the staffers we met had been Americans abroad themselves and that made them even more empathetic.

Local Parliaments:  Whether you are a legal resident or you are living in your other country of citizenship, find out where FATCA implementation is at in the legislative process.  Read the IGA, follow the implementing legislation, and keep the pressure on local lawmakers.  Look for rules that would prohibit discrimination against US Persons.  If it isn't there, insist on it.

Vote:  If you are still a US citizen one of the most powerful acts is to vote and to let your US lawmakers know that you are a voter and a constituent.  The meetings I attended where I was a constituent as well as an AARO delegate, I was listened to all the more attentively.  It does make a difference.  

Last word.  For years we have been going about our lives outside the United States with the impression that U.S. politics does not directly concern us while we are outside the homeland.  We certainly never imagined a FATCA in our future.  This is our wake up call.  American politics is a blip on our radar, but now we are certainly on theirs and not always in a good way.  We are being forced by the homeland to make decisions.  

We can choose to engage or disengage, but invisibility or simply being left alone is clearly no longer an option for any of us.


Allison said...

Well done Victoria. I argued long ago that a same country exception was the easiest thing to do to mitigate a large part of the glaring collateral damage problem. It is frustrating that Treasury will act to bind the United States in pseudo-treaties on a global basis--a huge undertaking with massive controversy and consequences attached--but not lift a single delicate finger to make this simple fix.

Tim said...


So basically they know there is a problem but are unwilling to do anything about because it might cost them votes and that is all the really care about. They are holding penalty "mitigation" as a carrot really to stem the number of renunciations and to at least slow down host country opposition to FATCA.

This is absolutely what I suspected and why I have been pushing litigation from the get go and focusing on host country politics over US politics.

Tim said...
This comment has been removed by the author.
Tim said...

This is a bit off topic and Blaze will not like what I have to say but one of the politicians I admire the most is former Ontario Premier Dalton McGuinty. Why, McGuinty probably committed one of the most dangerous political acts in Canada of the last 20 years. McGuinty eliminated the Ontario Retail Sales Tax and replaced it with a provincial value added tax harmonized with the Federal GST(Something Quebec had done many years ago).

At the time the entire Canadian media establishment basically said McGuinty was RIGHT on policy but WRONG on politics and not just that would destroy himself and his party on a policy totally off side of public opinion. Many people in the media who never liked McGuinty(but privately probably actually supported his sales tax policy) were quite vocal in cheering for his political annihilation.

Notwithstanding the bad press and demagoguery McGuinty did get away with it after all and was successfully reelected after harmonizing the two sales taxes(A policy everyone knows was the right thing to do).

The type of political courage is sorely lacking in America but to McGuinty's credit he made Canada and Ontario a much stronger place.

*Blaze will surely have other views

Anonymous said...

It has been looking as if the Scandinavian solution is the only solution. In Scandinavia, there are few direct solutions, only indirect solutions. In this case, the bank managers actually understand what is going on. As they converse with their customers, they refuse to acknowledge that such a regulation exist and refuse to acknowledge that the one standing in front of them is indeed a "US person.".

In the same manner, a significant portion of IRS agents process paperwork without asking uncomfortable questions such as "why do you year after year report no bank interest"? Individually they know not to ask questions.

This implementation, using the bulk of the manpower of the banks and IRS, is satisfactory for a majority of the population.

However, what happens is that a certain percentage will indeed get screwed by the rules. The first ones screwed are those that try to comply. Next, come those that have agents that follow the rules as they should have done.

So, in the beginning the percentage of people getting screwed starts low, although the damage is very very high to each individual. The number of people getting screwed will increase year to year.

AtticusinCanada said...

So because of their myth that Americans Abroad are yacht owning, champagne swillers no one will speak up. It's then acceptable to them that people are losing their citizenship. You know I still can't believe this is happening. Hope they get what they want out of all this. It's been really hard to hear them championing on FATCA and not saying a peep about what they clearly know is happening. They are strategically moral. How nice for them.

A lot of work has gone into FATCA for them. That's just awful for *them* therefore they cannot admit it needs some it.

Well, given the report back I see we're pretty much dead to them.

I get it, they can't be seen to go against this policy their side voted for based upon their mythical story. So sorry, you lost your citizenship. We feel "bad" but, under the bus with you. You know that's not a small thing. It's huge...can't wait to see what happens after July. We're bad political capital for them. So it really doesn't matter. I hope this whole thing eventually blows right up in their smarmy rich faces. Irony? They are the ones who are rich, who hide money, who do all the things we're being thrown under that bus for. They need the sound bites.

Please hand over your passports, do not pass "go", go directly to jail. We feel so bad about this, you understand. I'm not saying the rest of what I'm thinking about the political elite class under this potus.

Basically they're going to allow this to go on with no amending.

Just Me said...

So no one knows how to kill the FATCAnstein monster of their own creation! Good intentions have bad outcomes, and "oh dear, what can we do now that we have unleashed them?" Wring our hands?"

Congressional legislation is dangerous for mankind, is the lesson I have learned. With every new bill passed, I wonder what disaster is buried in its bowels...

And so I will continue to warn the unsuspecting to steer clear of U.S. entanglements. Mitigate your risk!

Anonymous said...

Thanks for all your efforts this week. The summary sounds pretty depressing...
Do letters really have an impact if they're not willing to do anything, even something that does not require legislation.
Our votes are so diluted that one can wonder if it' really worth it.
A lot of Americans aren't citizens of the country they reside in, so they really don't have a voice.
What is left??
I am pretty depressed.

Lea said...

Do you have any feel for how politicians are viewing US reciprocity as it's being proposed in the future budget proposal/Green Book?

Victoria FERAUGE said...

Thanks for the comments.

@Allison, I think a same country exception just might be doable. One person I talked to said that something like that was in the Canada IGA but I sure didn't see it.

@Tim, Yeah they know there are lots of problems. In particular the renunciations have made a big impression. But they are not going to reverse course. That's how I read it.

@Atticus, I think it's going to be one unholy mess starting in July. And everybody seems to know that. But it's not stopping them.

What to do? I can't advise anyone because every individual's situation is different. Do you hang in there for the long political fight to get recognition and some say in homeland politics? Or do you say that it's not happening in my lifetime and make that appointment with the consulate?

I'm sitting here in my hotel room and *I* am unsure what to do. I think I'd like to fight for mitigation and the long slow fight for legitimacy in the homeland and I saw some encouraging signs that people are receptive to that.

But I don't know. Doing that means living with CBT for YEARS....

Again, I don't know. What do you think, folks?

Tim said...


I agree with Allison that a home/same country exemption is something worth fighting for but I have not seen any sign the people making the decisions are going to go for it. To their credit Democrats Abroad is pushing on this issue but I have seen no sign that they are having anymore success that we are.

I guess the questions is what do you think the pain threshold is on the renunciations. Right now we are running at about 3,000 a year does 10,000 a year make it a much bigger political problem.

Patrick said...

"to make an omelette, you have to break some eggs". I think that was a phrase Stalin was fond of.

I see no difference now between American "NeoCons" and American "New Progressives". They're indistinguishable to me with their 'strategic morality' (good phrase!). I've lived outside of the US for so long it's been difficult to see how nasty and polarised US politics has become. FATCA is a product of this nastiness. I'm often surprised that the US can continue to function with such social and political division.

Anonymous said...

The same country exception is fine for expats who live in stable countries. But for expats like me who live in a politically and economically unstable country on and off being on the brink of war, keeping ones retirement where it is vulnerable to being lost due to conflict or just plain expropriation is not prudent.

What is good for the American diaspora in Canada and the EU should be good for the diaspora in less stable places such as the former soviet republics, the balkans, the middle east, africa etc.

ACA and others complain about unfairness, what about fairness for all American expats? Or should the the expats living in the third world be considered third class citizens rather than second class like those living in Canada and Europe?

Something to think about when claiming to be lobbying on behalf of "all" Americans abroad.

bubblebustin said...

Thank you for the update, Victoria. Did you get any feedback on a switch to RBT?

Anonymous said...

Further to my previous about lobbying for a same country exemption, below is a link to the Failed State Index.

Many Americans living in the Alert or Warning countries do not keep their retirement savings in the countries where they live and work. They keep it in the nearest country in the Stable or Sustainable categories, many of which have already signed or are in the process of signing IGAs? At least until we get kicked out of the banks.

So my question is, does ACA or AARO represent Americans living in the 126 countries in the Alert or Warning categories of the Index? Or do they only represent Americans living in the Stable and Sustainable categories?

To me, an expat is an expat no matter where he/she lives. None of us deserve to be discriminated against or abused by a government several thousand kilometers away.

So please try to help all of us, not just the expats in the countries where your organizations happen to be headquartered.

And just for the record, the expats living in the third world do not have it very easy. Not only do we not consume any US services or benefits, we have very few local services or benefits where we live.

Moreover, the local government officials are usually highly corrupt and banking systems very dodgy. To top it off, some of us don't know when we may suddenly find ourselves fleeing to another country as war refugees. It already happened to me once and almost a second time a couple of years ago.

If you think living in the third world over the long term is a romantic adventure, try to imagine having electricity and running water only 50% of the time at best, year upon year. It's not for everyone.

I truly appreciate everything your organizations are doing. But please do try to think about us as well while you're lobbying to mitigate the damage inflicted upon all of us by CBT, FATCA, FBAR.

Were in the same kind of boats, just ours happens to be a lot less seaworthy than yours.

Lisa said...

I live in Europe and I also think "same country exception is too narrow. While it would be an achievement, it does not meet the needs of all Americans abroad. The reality is that Europe is made up of many countries and borders blur financially. Additionally, same country exception does not allow Americans to be truly competitive with nationals of other countries. I will provide 3 examples.

Example 1: Many Scandinavians retire to warm countries. Thailand is popular and Portugal is extremely popular due to its tax policies and climate. However, these retirees have earned their pensions and made investments in their country of origin and keep them there for convenience.

Example 2: My company's stock fund for all their European employees is managed out of a bank in the UK. The company got the best deal with this bank, ironically, this is exactly the same stock fund that US based employees participate in, the only difference is that the address for their fund is at a US correspondent bank. So same country exception does not help. In the almost 20 years that I have worked for the company, they have had 3 administrators for the fund. The first was in the country of the HQ of my employer, the second was in the US and the third is now in the UK.

3. I know. a young Russian-Swedish-American who has just been accepted into a trainee program of an automobile company. The plan is that she will work two years in the country that hired her and then be rotated within Europe and China for about 3 years each. Inevitably she will have bank accounts and possibly local pension accounts depending on the rules in these countries. Why make it harder for her than another national? By the way, she felt compelled to not mention her US passport on her job application, but had no qualms about mentioning the other two passports.

Same country exception is insufficient. To truly represent all Americans, it is time to look at realities beyond Canada and a few Central European countries. It is also important to think in terms of global mobility for Americans.

Anonymous said...

Hi Victoria - thank you for this. One addition: Senator Rob Portman sent a letter to Republicans Overseas expressing is full support for the repeal of FATCA. - Keith

Lisa said...

Victoria - you made a statement that implementing same country exception would not require legislation. Can you please elaborate on what legislation makes the statement, "Offshore bank accounts of Americans resident abroad should be exempt from reporting if they are located in the country in which they reside" easier to implement than the statement, "Offshore bank accounts of Americans resident abroad should be exempt from reporting"?

I appreciate the work you are doing representing Americans abroad and would like clarification of this statement especially since you are taking this position with Congressional reps. Thank you.

Unknown said...

Victoria, change must come from within. Stateside Americans must become aware of a problem to become motivated into changing it. You are trying to change the US from the outside, but that's a very difficult thing to do and you risk being pushed further away. I'd say, keep up the good work and do the best that you can for as Long as you can. But, don't be disappointed if change still doesn't come from within.

What I see going on now is what I saw going on in the past. The only change is greater awareness.

Lisa said...

I also wish to keep fighting for RBT. However, at some point one has to make a personal as well as a business decision and decide if it makes sense to keep US citizenship. For me, that will be near the end of my working life, which is not that far away. The decision will consider finances and the ultimate warmer place that I would like to live in.

For those of us who moved their lives abroad after a few years of working in the US, money may have been saved in IRAs and you cannot get it out without penalty until you are 59 1/2. So you have to calculate if the cost of doing taxes and paying taxes is greater than the penalty you would pay if you take the money out and/or the 30% tax rate that would apply if you expatriate.

You also have to think how you are going to manage dual reporting as you get older and possibly senile, especially if you have no ties to the US.

While I want RBT very much and work in my own way toward achieving this goal, I am not optimistic for the near to medium term (up to 10 years) and I would say a renunciation is in the cards. So renunciation is a matter of when. That means deciding when the time is right considering the factors that are relevant for me.

While it may be a business decision, it Is also a highly personal decision taking many interwoven factors into consideration.

Victoria FERAUGE said...

@Anonymous/Lisa, That is a damn good point. There are very good reasons to have accounts in countries other than the ones of citizenship or residence. I'll bring that up because I think it is important. And yes it is about global mobility.

@Lisa, We are asking them to redefine "foreign" and we think this would not require a law but could simply be a tweaking of regulation.

Just look at FATCA and then look at the finals regs. There is discretion. They do make changes when they take a law and then write the rules to implement it. What is not clear to me is how complex a process that would be.

@Dano, I ha an old poli sci professor who said that a "problem" in the political world meant a combination of awareness, ownership and a motivation to act. We are missing two out of three here.

@Suzanne, As far as I could tell RBT was not on the radar at all. At least NO ONE talked to me about it. What I did hear was that anything that requires legislation was pretty much a non-starter right now.

Inaka Nezumi said...

Thank you very much for the report, and your efforts, Victoria.

When you say nobody was talking about RBT, you mean on the Hill side? Were ACA/AARO/FAWCO et al. talking about it? Was the subject breached at all?

Victoria FERAUGE said...

@Nezumi - for some reason that I don't know ACA declined to participate in Overseas American Week this year. So no there wasn't anyone from their organization who could talk knowledgably about their proposal.

Anonymous said...

The overly narrow concept of SAME COUNTRY EXEMPTION is being actively promoted by ACA and Democrats Abroad as a "quick fix" to the very big problem of CBT.

They both need an education that there are many Americans living beyond the borders of the G20 countries as well as many Americans who are highly mobile within the EU.

Although their intentions are good, they really need to open their eyes to the world beyond the G20.

Perhaps this is something the REPUBLICANS OVERSEAS should take up.

Anonymous said...

Ukraine just signed or is in the process of signing an IGA.

How many Americans living in Ukraine are going to keep their retirement savings there?

What about Americans living in Lebanon, which also signed an IGA?

ACA needs to get out of Geneva more often.

Victoria FERAUGE said...

Well ACA as I understand it now centered in Washington, D.C. They have chapters abroad but what I heard was that everything will be run from D.C. from now on. If anyone has heard differently, please let me know.

The issue of representing all Americans abroad is an important one. FAWCO probably has the wiist membership because its a federation of women's organizations and they have members from many developing countries.

AARO just expanded more into Asia. Ross Feingold (Republicans abroad) is the new Asia Director for AARO. Really interesting fellow....

Anonymous said...

It would be interesting to know why ACA declined to participate in American Overseas Week.
We expect them to represent Americans Abroad at this type of events. They might get some heat because of it.

Patrick said...

I wonder how many people ('US persons') are completely unaware of this. I only found out about this by chance in September after reading article on the BBC website. The real tipping point and immediate concern for me personally would be loss of day-to-day banking services as people have experienced in Switzerland, Germany, Belgium and I guess now France. Since all the outgoings, bills, council tax, utilities is by direct debit it would be catastrophic for my young family. As far as I am aware, I have not heard of people having their debit cards swallowed up by cashpoints or accounts closed. Yet(???) It all seems really depressing as we don't seem to matter, even to our adopted countries.

bubblebustin said...

@Victoria, you write: "anything that requires legislation was pretty much a non-starter right now."

This to me means that Washington, DC is completely dysfunctional. What will it take for these "lawmakers" to realize that they no longer have the luxury of squabbling amongst themselves?

Anonymous said...

@Patrick, You said: "As far as I am aware, I have not heard of people having their debit cards swallowed up by cashpoints or accounts closed. Yet(???)"

Actually, this is happening in Belgium. Someone posted the situation on some expat's blog, but I can't find the link...
Maybe someone who is reading can post it.

Anonymous said...

Interesting article. I have followed your blog for a while, and I appreciate the work you are doing on behalf of US citizens abroad. Personally, I have always thought FATCA was a done deal, because it is supported not only by the United States but also by the vast majority of G20 countries looking to fill their own tax gaps. Furthermore, even if it were repealed, you would still have FBARs, form 3520's, phantom income and PFICs. For me, reality is, the US tax code is on its face biased against anything foreign or offshore. For years, the IRS was relatively lax in enforcement, mainly because there was no real money in it. Now, the IRS is very aggressive and has found a compliance issue. To date, the Service has been unwilling to be sensible about bringing expats into compliance, preferring a two speed (painful and very painful) punitive regime. Unless that changes (which is unlikely), renunciation for people who have built lives outside the US will be attractive. For me, the odds are is that Congress will continue to score easy political points by imposing stricter reporting and tax regimes on everything offshore, including citizens and by removing our so-called tax preferences. See recent proposals re: the removal of the FEID (last suggested in 2011). Future proposals could be reporting on not just account balances but deposits/withdrawals (a much more effective information tool).

Michael Putman said...

Thanks for the report; not sure if it is really as encouraging news as it seemed on first read, but it is certainly valuable insight into the official mind.

Anonymous said...

If ACA is now centered in Washington, that may explain some of their disconnect from expats in the developing world.

On the surface it makes sense for ACA to be positioned where they can get access to congresspersons.

However, there is a very real risk that ACA can become all too chummy with the tyrants who are out to rape us and be too willing to accommodate their demands in order to show that ACA is doing something.

This begs the question, why did ACA blow off Overseas Americans week? Perhaps its because they have now become Homelanders themselves.

Anonymous said...

Thanks for all of your hard work. It may be hard to get any movement before the November election, since Americans abroad don't turnout to vote. Anyone who is thinking of voting rather than renouncing can maximize the impact of their vote by registering early enough for their sitting representative's primary (if it is not too late for their state) and making sure that their representative knows they will be voting. Many districts are now either solidly Democrat or Republican, which means that the winner is determined in the primary. For example, if Charles Rangel, the author of FATCA loses, it will be to a fellow Democrat, not a Republican.

The strongest argument against RBT is Monaco, but there are ways of coping with that. Italy, for example, only continues to tax people who move to Monaco and other tax havens. I can't see the U.S. allowing U.S. citizens and green card holders to have accounts in bank secrecy locations.

Anonymous said...

If expats don't live in the US, they are not consuming US public goods or services. So what difference does it make if an expat lives in Monaco or Morocco?

A policy of punishing expats for living in a place like Monaco is pure BS.

And Italy is not exactly a model example to use as a country with ideal tax policies. There are reasons why so many of their citizens dodge taxes, namely highly visible level of corruption and disrespect for the rule of law by the government.

Shadow Raider said...

Italy does not necessarily tax its citizens living in tax havens. Italians who move to any country can stop being taxed as Italian residents, the only difference is that those who move to tax havens have to show that they no longer have economic ties to Italy. The country that actually taxes its citizens in Monaco is France, but only because the two countries made a specific treaty to allow this.

Victoria, I've heard many Americans abroad say that US residents think that they are millionaires. I live in the US and I can tell you that this misconception does not exist. I've never heard anyone say that here, and I don't know how Americans abroad got that idea. I have many friends who have relatives or other friends living abroad, they know that they are just regular people. The hesitation of Congress to defend victims of FATCA is due to the (weak) association between foreign bank accounts and tax evasion, but this has nothing to do with Americans abroad.

There is a misconception, however, about how the US serves its citizens abroad. Many people think that they can call the US embassy or consulate at any time and the US military will come save them or get them out of jail, or that they can get Social Security and Medicare just for being US citizens. Almost no one understands how these "services" actually work or how they are funded, and they are indeed used as a justification for CBT.

bubblebustin said...

@Shadow Raider

Even if those services existed, I'd happy to waive them to no longer be subjected to CBT!
The US government is the single biggest threat to US citizens abroad - why else would we be renouncing in record numbers?

Inaka Nezumi said...


It is a bit disturbing to hear that ACA did not participate. I honestly think their RBT proposal is the only way forward. This FATCA stuff would not even matter if we had RBT, assuming FATCA was limited to US residents. There would then be no reason for banks to discriminate against US citizens abroad. (Of course immigrants to the US would still have the same problems they have now.)

I can only hope that ACA is focusing their efforts on the RBT campaign in different ways.

If nothing requiring legislative is possible soon, though, I don't see much hope. If legislators can't be bothered to legislate... well, all I can say is nice work if you can get it.

Shadow Raider: the misconception about us all being millionaires may not be held by the average person on the street, but that is definitely the populist spin being put on by politicians. At least that's we're hearing out here. If it is not a misconception on their part, then it is something even more inexcusable.

Regarding the suggestion you made over on IBS about expanding the use of citizenship-less nationality, would that be something that could be accomplished without legislation?

Inaka Nezumi said...

A comment:

"Another possibility comes through the IGA's some of which have clauses that say that financial institutions are not to discriminate against US Persons. It was pointed out that the IGAs have not yet been implemented and so one avenue Americans abroad have is to watch the host country legislative process carefully and jump in if we don't see those non-discrimination clauses included in the local laws that implement FATCA."

Host country legislation is not where this enforcement is supposed to come from, according the IGAs.

The US-France IGA says (the US-Japan IGA has similar language):

"II. Deemed-Compliant Financial Institutions.
The following Financial Institutions are Non-Reporting French Financial Institutions that are treated as deemed-compliant FFIs for purposes of section 1471 of the U.S. Internal Revenue Code. In addition, paragraph C of this section provides special rules applicable to an Investment Entity.

A. Financial Institutions with a Local Client Base
A French Financial Institution that meets all of the following requirements:


10. The Financial Institution must not have policies or practices that
discriminate against opening or maintaining Financial Accounts for
individuals who are Specified U.S. Persons and who are residents of

The impression I get from this is that the penalty for discriminating against locally-resident US persons is to lose the "deemed compliant" status. The enforcement would have to come from the US, in the form of the dreaded 30% withholding if the bank does not report on its accounts. It is not up to the host country to enforce this.

Any legal experts who can comment on this interpretation? (Shadow Raider?)

BUT, the big catch here is that the IGA only requires the financial institution to allow locally-resident US citizens to OPEN accounts. It does not prevent discrimination on what can be done inside the account. Here in Japan, for example, many brokerages offer access to US stocks and ETFs, but while they allow locally-resident US citizens to open accounts, they do not let us buy US stocks and ETFs in those accounts. The reason for this predates FATCA, going back to the Qualified Intermediary rules that went into effect a few years ago. The FATCA IGA does nothing whatsoever to mitigate this problem. It is mere window dressing.

(And of course, if a US citizen were to buy non-US ETFs, then the insane PFIC rules come into play.)

P. Moore said...


Thanks for your report here. I find it very interesting and it sounds like you had quite a week. I think some form of more robust information sharing is inevitable, but I also believe that once the casualties start to pile up, there will be substantial changes in FATCA or a replacement of some type. Likely it will take some time and blood on the floor.

I read the ‘Mopstick post’ to which you refer. From it I quote: “The reality is, advanced modern bureaucracies want FATCA too.” I think I would have to disagree with that statement on 2 fronts, being:

1.) FATCA is an enforcement mechanism for CBT. I highly doubt any of those other countries were looking for a CBT tool. I would again point out that if every country was ‘entitled’ to have every other country report on a CBT basis, there would be chaos and the combined compliance burden would be unimaginable. Can anybody comprehend the costs associated with every country reporting on their immigrants and duals and relatives back to home countries. The US alone would have to report to 100+ countries on 10s of millions of ‘Foreign Persons’ as defined by those 100+ countries. Not a chance! And there is not a chance other “modern bureaucracies” want to open that pandora’s box.

2.) Perhaps Mr. Mopstick forgot about how Canada’s Finance Minister publicly opposed FATCA when it was passed. I think that indicates there was no negotiations with the #1 trading partner, which has the most ‘US Persons’.

To me, I see that the US certainly has the wherewithal to start this chaos and make one helluva mess, but I am very skeptical they have what it takes to see it through to a successful conclusion without substantial changes. Aside from having no real means of reliably verifying substantial compliance, there are too many unintended consequences and only a growing body of opponents. I think the real question is how much damage will be done before reasonable heads prevail.

Anonymous said...

Several of you commenters have asked about American Citizens Abroad (ACA). Indeed it is active. It has reorganized, for one thing, and now has a foundation which is organizing a full-day conference in Toronto on May 2nd about Citizenship-based taxation vs. Residence-based taxation,

Inaka Nezumi said...

Why didn't they participate in Overseas Americans Week?

Anonymous said...

Firstly, I disagree that countries implementing FATCA IGA's are doing so voluntarily. In Canada's case, the "guidelines" for implementing the IGA make it pretty clear that lip service only is intended. OECD will gladly link arms to catch true tax cheats - none of them have an interest in enabling the US to mow their tax lawn. The goose can only have its feathers plucked once after all.

I see little hope the US will mend its ways on this issue in the foreseeable future. The implementation of FATCA will be a train wreck, the costs to the US and the world will be huge and the outcome will be negligeable. The loss of good will, irreparable.

Any country that treats its diaspora like rats leaving a sinking ship (without asking what they can do to fix the ship instead of blaming the rats)has more problems than just FATCA I'm afraid.

Shadow Raider said...

@Inaka Nezumi, My nationality proposal would require legislation, but it would not touch the tax code.

Just Me said...

As we have often said, FATCA was impetus for the OECD's global automatic Tax data exchange mechanism called CRS (Common Reporting Standards). It stirred into action those modern countries that Mopsick talks about. Those are mostly those with the unsupportable social and entitlement programs or ones who want into the club of elite 'modern' countries. They need more revenue, and wrongly, imho, think this will solve their problems.

Now, you see, without sanction, many of them are signing up and putting out statements. Look at the list of countries that are early adopters. Count the ones that are IGA capitulaters.

Remember, GATCA is a program that reports EVERYONE, and ALL financial activity without deemed compliance exemptions, loopholes or so called "safe harbor" $50k minimums.

Missing of course, is the U.S.A.

It's sanctions put the wind in the sails of GATCA, and now, since it is residency based, the U.S. isn't interested, or so it would seem. Congress wants America to be the last Tax Haven standing, and hard to see them voting in support of joining up.

Their unilateral FATCA sanction regime based upon CBT will stay in place with only token reciprocity from the IGA.

What does the end game looks like from the FATCA mission? What will ultimately come of that 'simple premise' that you have written about? It was represented by Obama's statement in the White House back in 2009, when the offshore jihad was launched.

Answer: It is unknown.

However, it is hard for me to see it as a positive development for the global economic activity as billions of people make individual decisions in response.

Now, for those living abroad it now comes down to the personal question of how much do you value that passport? That's the reality. For the answer to that question, it seems to me, you have a lot of soul searching to do.

Congress is NOT going to change anything any time soon. That is clear from your visit to the center of the universe, the District of Corruption.

The FATCAnatics of the left in Congress and Treasury are the NeoCon equivalent of the right with their war of pre-emption in Iraq. In 2003, even with the early enthusiastic "mission accomplished" statements the war raged on and on at huge cost and collateral damage. I expect the same in this War on Offshore Tax Evasion.

Like the War on Drugs, 50 years from now, we will still be talking about. The only question is how much more repressive will the U.S. be in its continuing attempt, as Senator Max Baucas said, to "root out tax cheats once and for all." Won't happen of course, but these guys are on a ideological mission, damn the consequences.

Sally said...

Well I asked ACA why they did not participate. They said, "The original intent of Overseas Americans Week was so that the groups and organisations that were not present in Washington had an opportunity to visit key offices and advance our issues. With ACA now located in Washington DC the need for an annual week of meetings is not necessary." and went on to list the various meetings they had had with politicians and officials recently.

Many countries, including (most emphatically!) Germany, would dearly like to know about the interest income their residents have from accounts in "tax havens". The US's CBT doesn't fit.

US Congress is not interested in doing anything reasonable in coordination with anyone else. They think they rule the world. Just take the simple example of the days they choose to switch to and from Daylight Savings. Nuts. The whole kit and caboodle are just nuts.

Victoria FERAUGE said...

What Sally said. ACA now has a permanent presence in Washington D.C. They can set up meetings any time. Makes sense.

Tell you what was really cool though was being there with FAWCO. This org is probably has the most members and the best geographical spread.Not to mention they have observer status with the UN. The FAWCO folks had the BRILLIANT idea of going to talk to many members of the Women's Caucus. FAWCO has been tracking how FATCA is impacting US women around the world and has stories from just about everywhere. And I can tell you that the meetings with those reps around that were really really good. All the more because many of the staffers we met with were women and could really relate to the stories.

If I may relate something that happened to Ellen and I when we were walking about Washington. I think it really highlights the problem we have getting people in the homeland to care about what is happening to us.

Ellen took me to the National Cathedral and we joined a tour. At some point the guide asked the group where everyone was from and Ellen replied (for both of us) "the suburbs of Paris." And the reaction of the guie an the other tour members was illuminating. It was all "wow" and "you're so lucky.| Now Ellen tried to say that, hey, living in a Paris suburn is not fundamentally different from living in the suburbs of any big city like Washington or Tokyo or any place.

Well, they weren't having any of it. Now imagine tryin g to convince the same group that US citizens abroad are having a hell of a time right now. Between the sense that we are lucky to be living abroad and the inconceivable (to them) idea that someone might be discriminated against because of their American connection, it becomes clear why we have trouble getting traction for our concerns. We are perceived as people who have had more than our fair share of good fortune. And that is a problem.

Inaka Nezumi said...

Thanks for the info, Sally. I guess it makes sense.

You know, I've spent so many years bending my life into a pretzel to try to stay compliant with laws that are constantly changing in ways that make my life ever less tenable as a US citizen abroad. Like playing an endless game of Twister, except where the penalty for losing would be to have all my meager life savings wiped out.

I'm tired of feeling in jeopardy all the time. I feel like it would take just one more f-you maneuver from Congress for me to give up and sever all ties. In a way, it would almost be a relief if they would just go ahead and do it, and I could then concede honorable defeat.

Anonymous said...

Well, I guess to some extent, at least now we know where we stand. This transition period, in which we went from being below the radar to the highest enforcement priority, in which the IRS found a stick to beat us with (the FBAR/8938/FATCA) and the political cover to do it (the ever popular hunt for offshore tax evaders), is probably the most difficult. For some, the transition period (and the need to become compliant) will be costly (for others, less so). Going forward, we all know that being expats means we have to comply in all respects and at all times, take tax advice for all financial decisions and concede all rights to financial privacy. Every expat has to realise that living abroad entails material political and financial risk. It is in that light that we have to weigh the value of US citizenship. How one does that is very much a personal decision but not doing that, especially if you have built a life outside the US, is pure folly.

Unknown said...

I don't really have anything productive to add to the comments right now.

But I just want to let Victoria and others know that I truly appreciate your efforts, especially last week.

Now is not the time to be silent...

Christophe said...

Victoria, for what it's worth, all expats, not just Americans abroad are considered and viewed as "privilegies" for their experience (and some will say success) in a different country. Many people told me that - even an army guy, since I opted for a 16 month civil service abroad, instead of the 10 months playing soldier somewhere in France.
A lot of it is envy of the experience, and for some better (or different) way of life.
So it is.
Thanks for your efforts fighting for non discrimination. It affects us all.

Anne Hornung-Soukup said...

Dear Victoria and others who have commented,
I'm sorry I've taken so long to provide comments from ACA but my day job (and evening and weekend !) has been interfering in a major way with my ACA work.
I saw several comments on the fact that ACA was not present at the meetings in Washington recently, and I just wanted to assure EVERYONE that ACA is as active as always, even more so, and our Washington office (with one person there !) does not in any way mean we're suddenly a purely DC organization and we're ignoring our membership of Americans living outside the U.S.
The date for the meetings in DC was set relatively late and MaryLouise, who is in DC, had family business which she absolutely could not move. In addition, some of the ACA people who have been in DC year after year were not able to step in either. In addition to the scheduling problem, we did feel that with dozens of meetings held in Washington over the past year,by various ACA people from DC and overseas, it was less necessary that we scramble among country contacts and volunteers to find people to participate. And last but WAY not least, Victoria was attending and she is a wonderful representative for all of us overseas organizations!
We all need to work together to get the US to move to RBT, and all organizations and individuals are welcome in this. As a long-time (too embarassingly long to mention) ACA volunteer, I'm proud of the efforts of everyone overseas who is working so hard on this and many other issues.
And point well taken that same country exclusion would not solve all problems - our own Karl Jauch is faced with the same situation so we're well aware. We do include it in all discussions, promise !
Keep it up, everyone. Democracy does work. And thanks, Victoria, for everything you've done and continue to do.

Tim said...

To Victoria's point I would go as far to say that many Americans think living in Montreal is quite exotic nevermind Quebec City. I personally never get the big deal but a lot of Americans for some reason do.

To give another example. I remember once an owner of a ski area in Massachusetts making a big deal how his ski area ranked #2 in Eastern North American for food and beverage behind 1# Mont Tremblant with its "French cuisine." Now Mont Tremblant is a nice ski area but Quebec and French cuisine is not the same. Nor is Mont Tremblant as exotic as Americans think. It is in easy driving distance from both Ottawa and Montreal.

*What does well Montreal have do with the rest of Canada. Well if you are a Canadian citizen you are free to live and work their even if you don't at the moment. US citizens can't say that nor as their anyplace in the US culturally comparable to Montreal or QC. Nothing against New Orleans but it doesn't cut it.

Tim said...


If you and Ellen said you lived in Quebec City I suspect you would get a similar reaction.

Patricia said...

AARP bulletin has a map of states with percentage of population living in state were born in state. for 8 states it was greater than 70%only 11 states and DC were less than 50%

American Mobility - Pew Social & Demographic Trends‎

American Mobility. Follow the RSS feed for this page: Americans are settling down: Only 11.9% of the U.S. population changed residences between 2007

Envy comes in part because American mobility is not what is was.

Anonymous said...

Reference to what Victoria wrote about FAWCO, I think its going to be women who change this.

CBT, FBAR, FATCA, Exit Tax, Reed Amendment etc are all meant to bully Americans into not emigrating.

Most men will be bullies if they have the chance. I know, I'm a man.

Just look at the creators and advocates of the above bullying legislation: Schumer, Reed, Obama, Levin, Rangel et al. They're all men.

It will be the women who change this. I am confident of it.

Anonymous said...

I saw this over at Allison Christians' blog about taxpayer morality:

When it comes to citizenship based taxation, there is no morality, no matter how the powers that be try to justify it.

Inaka Nezumi said...


Thank you, and ACA, very much for all of your efforts.

Victoria FERAUGE said...

@Christophe, Thank YOU for being in the fight. What disturbs me about all this (and Robert Morris had an article about it) is the impact on global mobility. It's a Good Thing for people to move around. I see FATCA and CBT as one of the greatest danger to the right of people (not just capital) to move freely around the planet.

@Anne, Thank you, thank you, thank you for your note clarifying things. ACA does great work. That's why I'm a member. :-)

And your point about us all working together is spot on. This is the time for all of us to come together. The US political process is what it is but we can keep the heat on them until the sun comes out...

Edelweiss said...

@Inaka Nezumi, @Victoria

My read on the "anti-discrimination" clause in IGAs is that it applies only to those institutions who wish to apply to become deemed compliant FFIs under the local bank "exemption".

An FFI with deemed compliant status under the local bank "exemption" still has to implement FATCA onboarding and reporting procedures but then doesn't report on US person account holders that are resident in the country of operation.

In order to qualify under this local bank "exemption" they have to meet each of the criteria (I think there are 11 in total). These criteria are severely restrictive. First and foremost, these FFIs have to be extremely small. Second, they can only operate in one country. Third, they can not solicit customers from anywhere outside their country of operation and almost all of their assets must be from persons or entities resident in their country of operation. And the list goes on.

Because of the severe restrictions on which FFIs can qualify for the deemed compliant local bank "exemption" there are very few FFIs that would have this option available to them.

By definition (since they have more than one country of operation), every "global" and pretty much every "international" FFI will not have the anti-discrimination clause apply to them. These institutions are free to discriminate against US persons as they see fit.

Furthermore, the "anti-discrimination" clause applies only to the extremely small number of FFIs who are capable of qualifying for the "exemption" and who choose to do so. It's not clear to me why they would want to qualify under the "exemption". The "exemption" doesn't provide any relief from the onboarding or reporting requirements. Meanwhile, by attempting to qualify, they have to agree not to discriminate against US persons resident in the country of operation.

Finally, the types of FFIs that might be able to qualify under the deemed compliant local bank "exemption" and would willingly accept the business restriction not to discriminate against US persons resident in the country of operation are unlikely to be offering much beyond the most basic of financial services like a deposit account.

Personally, I think any politician or IRS official suggesting that the "anti-discrimination" clause is likely to provide any relief is being entirely disingenuous. It can only ever apply to an extremely small number of FFIs that offer extremely limited services and it's entirely voluntary.

Jgirl said...

Bonjour Victoria!

I am a CCTV News Correspondent, based in Washington, DC. I am interested in talking with Americans living abroad who have been negatively impacted by the FATCA legislation. Have you been impacted by losing access to financial services or banking services? Are you willing/interested in telling your story? I have colleagues based around the world....feel free to email me at with your response. The interview would air on our program, BIZ ASIA AMERICA next month. Best, Jessica
You can watch us here:

Anonymous said...

@Jessica Stone:
Starting about two months ago and without advance notice, Americans, residing in Switzerland, have had their bank accounts frozen at PostFinance, a banking unit of the Swiss Post. For more information, you might wish to review posts to the thread called "PostFinace DEMANDS past FBARs" at This thread is under the Finance/banking/taxation category. As most people need bank accounts to receive their wages and pay their bills, including rent, the situation is becoming dramatic for Americans in Switzerland.

bubblebustin said...


Another angle you should investigate is the number of people pulling their money from banks in a preemptive move to having their accounts closed or reported on when FATCA is enacted. I know for certain that many in Canada are doing just this by moving their savings to certain exempt credit unions.

Remember the Alamo said...

All you expat (& domestic) Americans pissing in your pants over FATCA and the irs disgust me.
If you would all get together and
RESIST EN MASSE, they would have to drop it. JUST DON'T DO IT. PERIOD. US Treasury can't FATCA their way out of a paper bag, no less regulate the whole world. As for American taxation of their citizens worldwide, on the basis of nationality, screw them. Just pay tax in your new country of residence and forget the rest
Come on guys, where is the Spirit of ' 76? Remember the Alamo & all that - we have become a nation of WIMPS Like scared children, slavishly submitting to the Treasury & irs' every demand..

AtticusinCanada said...

@remember the alamo. Nice for you to say but, my health is going down the tubes. I am not in good shape these days and the incredible stress of FATCA and losing my citizenship have not helped. I have a kid about to go to university and we're staring down the barrel of twenty thousand a year in student loans. We just don't have the $$$ to pay outright.

@Victoria, the long slog, the hard fight or protect your sanity and just give it up. That question is different for everyone too. I waited two and a half years. Poured myself into letter writing, doing media, talking to hate fileld ranters who just won't get it. Talking to people like DA who DO get it but, won't rock the boat too much.

I came back to this post because I saw it as the final hope when you went to D.C. if nothing is going to stop this then HOW can a person with very little resources to fall back on continue on under CBT?? Because you know taking a couple of thousand a year to report on meager savings just makes zero sense. What are these people to do? Go on welfare in their countries of residence and second citizenship so they can remain American?

Treasury just came out with another email the other day saying in essence that those who complain are up to illicit activities. I'm tired of being called a criminal or having it implied that I am one and worse? I think this will get a whole lot worse before it gets better. In order to save face they will ending barring some from entering the states again who did renounce. The writing is on the wall. It's clear from the actions or inactions so far that expats are to be thrown far, far under the bus and to be silenced.

The spirit of 76...I already have my name out there and stil no CLN. Really at this point the most humane thing they could do is streamline the renunciation process and allow the consulates to issue CLN's on the spot.

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