Americans abroad are giving up their citizenship as banks shut down accounts

As a citizen of Uruguay I find the last paragraph very funny:<p>“I feel about the same obligation to file US tax papers as you would if the supreme court of Uruguay all of a sudden decided you were a citizen and had to file a tax return there,” he tells the Guardian.<p>By the way, Uruguayan citizenship is VERY easy to acquire. American expatriates (and dollars :) ) welcome here :)<p>Edit: easy as in requirements. There&#x27;s a lot of paperwork involved.<p><a href="http://nomadcapitalist.com/2014/03/09/top-5-best-second-residency-programs-central-south-america/" rel="nofollow">http:&#x2F;&#x2F;nomadcapitalist.com&#x2F;2014&#x2F;03&#x2F;09&#x2F;top-5-best-second-resi...</a><p><a href="http://flagtheory.com/citizenship-in-uruguay/" rel="nofollow">http:&#x2F;&#x2F;flagtheory.com&#x2F;citizenship-in-uruguay&#x2F;</a><p>&quot;It will take approximately 3 years for a married couple, with a good amount of time spent in country. For singles, it will take 5 years – with a similar amount of time in country. This makes Uruguay more attractive for married couples rather than a single applicant.<p>Uruguay wants you to prove your residence by documentation – sometimes odd documents such as a doctor’s appointment slip, a library card. The idea is that they really want you to prove you are actually living in the country. This documentation is again, not always what you might expect – so document everything and when in doubt – shoe box it.<p>After you have received permanent residency, you should talk to an abogado about citizenship and travel document options. Again, permanent residency is required to be able to receive any kind of travel documents. Further, a cedula is somewhat considered a travel document as well and can allow you to get around South America in many instances.<p>Strong Travel Document<p>A Uruguayan passport is one of the strongest in the world. Under this passport, you can visit Europe visa free, and most Uruguayans have a 10 year American visa.&quot;

The underlying problem behind all of this is that the USA&#x27;s policy on taxing non-resident citizens is, fundamentally, absurd.<p>As a permanent resident, it&#x27;s the one thing that gives me pause about applying for citizenship (I know that the same rules apply to me whilst I&#x27;m a permanent resident, but I&#x27;m concerned about what happens in the future if I decide to leave the USA).

I was personally bit by this (FBAR non-compliance). I worked abroad and was unknowingly violating it; found out about it from reading the news and hired a pro to extricate myself from the situation.<p>The bank account held five figures. The cost to come into compliance was low five figures. The potential penalties were easily high six figures. It was much larger than the either (a) my total earnings from 4 years abroad or (b) the maximum amount the account had ever held. I believe my tax guy was on the cheap end too.<p>I&#x27;m still angry about it; I feel like I was guilty of nothing more than ignorance. IMHO this is case of strict policies that were intended for rich tax evaders. And they&#x27;re being retargetted at millions of expats &amp; foreign nationals.

This story appears on HN like clockwork every 3 months. Why? Because the Federal register publishes quarterly figures, the articles write themselves with very little work, and there&#x27;s a large contingent of people on HN who think taxes are evil. I do think the policy of taxing US citizens on overseas earnings is unwise and FACTA is somewhat unworkable, but it&#x27;s worth noting that taxation of Americans living abroad (and at a higher rate, to boot) dates back to 1864, when it was introduced to defray the costs of the civil war.<p><a href="http://www.treasury.gov/resource-center/tax-policy/Documents/subpartf.pdf" rel="nofollow">http:&#x2F;&#x2F;www.treasury.gov&#x2F;resource-center&#x2F;tax-policy&#x2F;Documents...</a> has all the information, and you can see the little quarterly blip on the search results graph as newspapers run the story reliably every 3 months. There has been a distinct uptick since the passage of FACTA but applications seem slightly down this year compared to 2013.<p><a href="http://en.wikipedia.org/wiki/Revenue_Act_of_1864" rel="nofollow">http:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Revenue_Act_of_1864</a>

Random question:<p>If you had dual citizenship (e.g. Canadian + US), do you even need to tell a bank about your US citizenship when opening an account?<p>Can&#x27;t you just open it as if you were a Canadian only? Even your US SSN wouldn&#x27;t be associated with it, so for all the US G and the bank know you&#x27;re just someone with the same name and birthday.<p>As a random aside: The US Gov is practically the only country in the world who tries to collect income tax from US citizens living abroad. The fact that Americans who move away have to file US tax returns for the remainder of their life is bonkers.

Something worth noting is that FATCA essentially makes it impossible for an institution to remain &quot;FATCA compliant&quot; if they have any financial relationship with a non-compliant entity. Sure, they can have such relationships, but the U.S. Treasury department can then impose a 30% penalty on any transaction that passes through a U.S. bank. Given that the vast majority of international payments are made in USD, that 30% penalty is going to be very painful for any bank that purposefully decides to be non-compliant.<p>The end result of that will be that the global financial system is going to be bifurcated into &quot;compliant&quot; and &quot;non-compliant&quot; institutions. Believe me, most banks&#x2F;insurance companies&#x2F;financial entities will find it worth their while to eventually become compliant.<p>The reason that more countries aren&#x27;t complaining about this (and most are actually entering into bilateral enforcement agreements with the U.S. Treasury department) is that they&#x27;ll then be able to get access to the same sorts of information on their own citizens that the U.S. is getting on their own as a result of FATCA.

I&#x27;m going through this IRS bullshit -personally-. I was under the impression filing taxes was simple, hell why would they make it complicated.<p>But nope, if you live abroad it&#x27;s twice as complicated for an ex-pat.<p>Worse still, if you&#x27;re self-employed (like I am) and a freelancer it&#x27;s ever more paperwork and edge cases to be careful of.<p>And the cherry on top! Software engineers have a whole different set of tax rules. Fuck you IRS, you greedy pricks.

In Canada, people can put money into a tax-deferred retirement fund (RRSP); the income tax is paid only when the money is withdrawn (sometimes 30 or 40 years later). The US does not recognize the RRSP as deserving of a tax-deferred status, but as a regular savings account. (<a href="https://www.tnvisaexpert.com/articles/how-canadian-rrsps-taxed-in-usa/" rel="nofollow">https:&#x2F;&#x2F;www.tnvisaexpert.com&#x2F;articles&#x2F;how-canadian-rrsps-tax...</a>) Thus some dual US-Canada citizens suddenly have faced significant tax bills from the US. This includes people that have never set foot in the US since they were toddlers.

Is it just me that finds the situation rather ironic considering the fact that unfair taxes levied on emigrant citizens was the main reason for Americans to seek independence from the British in the first place?

Disclosure: I am a United States citizen (by facts of birth) and my wife is a United States citizen (by naturalization). Both of us have lived and worked both in the United States and as long-term expatriates in another country (Taiwan, where my wife is from). During both of my stays in Taiwan, I went through the trouble of filling out United States tax forms each year related to income that was wholly derived from my employment in Taiwan. I&#x27;m a dot-the&#x27;i&#x27;s and cross-the-&#x27;t&#x27;s kind of guy that way. I make sure to follow the laws I know about, the better to protest against laws that really upset me.<p>The saying in the newspaper business is that &quot;&#x27;Dog Bites Man&#x27; is not news, but &#x27;Man Bites Dog&#x27; is news.&quot; So we see news stories from time to time with the surprising story hook that some people with United States citizenship give up their citizenship, usually for tax reasons. But this is news precisely because it is very unusual. This influences the decision-making about citizenship of only tiny numbers of Americans. Most United States citizens are happy to have their citizenship, even if they live overseas for years at a time, as some of my friends and several participants on Hacker News do.<p>There are still probably 100 million or more people around the world who be glad to immigrate to the United States.[1] On the basis of net immigration among all countries in the world, the United States is still by far the winner in gaining capable people from other countries on a net basis.[2] The exceptional cases of persons with high earned income overseas who come out ahead economically and dipomatically by renouncing United States citizenship are still exceptional cases. Most United States citizens abroad are quite happy to have the passports and the consular representation they have as United States expatriates, as contrasted with being citizens of the country they work in or expatriates with some other citizenship.<p>[1] <a href="http://www.gallup.com/poll/161435/100-million-worldwide-dream-life.aspx" rel="nofollow">http:&#x2F;&#x2F;www.gallup.com&#x2F;poll&#x2F;161435&#x2F;100-million-worldwide-drea...</a><p>[2] <a href="http://www.theatlantic.com/international/archive/2013/09/232-million-people-left-their-countries-for-new-ones-where-did-they-go/279741/" rel="nofollow">http:&#x2F;&#x2F;www.theatlantic.com&#x2F;international&#x2F;archive&#x2F;2013&#x2F;09&#x2F;232...</a>

&quot;Steep penalties add muscle to the law. If a foreign bank – not just in Canada, but anywhere – fails to report even a single US citizen as a customer to the IRS, the US Treasury department would withhold 30% of the banks’ US income as penalty.&quot;<p>What do they mean &quot;US income&quot;? How do they enforce it?

My wife and I had tentative plans to buy a place in Costa Rica, but put the plans on indefinite hold. FATCA was a consideration. It is now a pain in the ass for foreign banks to have USA citizens as customers.<p>Bill Clinton, way back when, signed a bill that would confiscate people&#x27;s money, over a certain threshold if they renounced their citizenship (money that had already been taxed). My wife and I certainly do not want to renounce our citizenship, so that is not an issue, but spending a lot of time in a foreign home without a local bank account is a nuisance.<p>I understand the motive behind FATCA (our government needs every bit of revenue it can get, except of course from corporations and the super rich :-) but FATCA is inconvenient.<p>edit: that is confiscated a certain, sizable percentage of money, over a threshold

Typical for the IRS to go after the small fry while letting the behemoths get a free ride!<p>Meanwhile, Facebook and Apple are supposedly based in Ireland. <a href="http://www.businessinsider.com/how-much-money-apple-avoids-paying-in-taxes-2014-6" rel="nofollow">http:&#x2F;&#x2F;www.businessinsider.com&#x2F;how-much-money-apple-avoids-p...</a>

Note that if you are a green card holder, you are subject to the same rules, and face the same denial of service by the financial institutions.

Portugal just ratified the Convention on Mutual Administrative Assistance in Tax Matters. Basically, the convention is an agreement pursuant to which Portugal agrees to use its own courts and police to collect unpaid U.S. taxes from U.S. citizens living in Portugal.

FACTA is one of those laws that makes me cringe. It was attached to a jobs bill and passed under the veil of popular support for going after supposed tax scofflaws that hold money in overseas accounts. In reality it was just a power play to further extend the government&#x27;s reach into peoples&#x27; personal lives, evidenced by the absurdly low reporting requirement for over-seas accounts with more than $50,000.

The reason for digital currencies is becoming clearer.

I wonder if there will ever be a time when there is a marketplace of citizenship. There are plenty of non-americans who want to become US citizens or immigrate legally. And at the same time there are US citizens going the other way.<p>An example could be an Italian wanting to move to the US because he works in Tech and a US citizen wanting to move to Italy because he works in Fashion. A marketplace would allow the two to work out a citizenship swap, with the necessary immigration paperwork.<p>In my view it is a win-win because<p>a. The immigration is two way.<p>b. In a global economy we can expect more and more people to move across countries. This service would facilitate that<p>c. The immigrants would want to do such a thing out of real interest in improving their lives and thereby the lives of their chosen country.<p>Given that Passports are a fairly new invention that&#x27;s about a 100 years old, (thanks to the French and Germans just before WWI), I don&#x27;t see why it can&#x27;t be created.

It seems like expat Americans need a political lobbying group to watch their interests. It would seem like large, international companies might have at least a passing interest too, as they might want at least some fraction of american staff to be posted internationally.

So are they policing all the corporations with this law too? Or just Average Joe?

As an American living in the US with a bank account abroad renouncing American citizenship isn&#x27;t an option. What can people in this situation do?

Note, that some of this (from FATCA) applies to visa workers who are not US citizen or greencard holders.<p>I work in the US on H1B, and I have been already declined to open an investment account in my home country in Europe, just because I was subject of US tax and have SSN. They told me that I&#x27;ll be open the account once I move back to Europe and lose my US tax status.

This type of article appears every few years. Frankly, I don&#x27;t think the numbers are very impressive, and they seem to be declining.<p>&quot;In 2013, 2,999 Americans renounced their citizenship; in 2014 so far, it’s a little more than 1,500 people.&quot;<p>The population of the US in 2012 was about 314 million. So 0.000009% renounced their citizenship...

FWIW, Those in Canada with foreign funds must fill out pretty much the same information about these accounts as the US-ians have to fill out about THEIR foreign holdings. I guess each country knows all about the local holdings and really want to know about the foreign ones.<p>US-ian expats have to file taxes each year. Unless they live in a country with a lower tax rate than the US, they don&#x27;t actually pay anything... Can&#x27;t talk about anything but wage slaves, but it&#x27;s like 3-4 hours to do the US forms each year. There&#x27;s at least two ways to make the US taxes disappear - expat forms and foreign tax credit forms.

This is going to sound snarky, but I&#x27;m not sure how else to ask it: why should I (or anyone not an expat) care?<p>It seems to me that the complaint is from people who don&#x27;t live in the US and have very little attachment to it other than convenience.