Expatriate group warns on offshore tax law

Expatriate group warns on offshore tax law

An advocate for American expatriates has released a warning on what it sees as the dangers of a U.S. law aimed at cracking down on offshore tax evasion.

The group, American Citizens Abroad, said in a new Web video that it understood the U.S. government’s goals with the Foreign Account Tax Compliance Act (FATCA). But the organization said the law, which was enacted in 2010 before going into effect in July, has a number of unintended consequences.

Under FATCA, foreign banks face a 30 percent withholding tax on income from U.S. sources unless they give the IRS information on U.S. accounts. That, the expatriate group said, has made it much harder for U.S. citizens living abroad to get banking services.

The law, the group said, encourages foreign banks “to simply remove Americans from their client lists. Imagine Americans abroad trying to create businesses without credit, a bank account or access to mortgages or loans.”

U.S. citizens have been more likely to give up their passports in the three months since FATCA went into effect, Bloomberg recently reported. (The Hill)