Over 1 Million Americans Have Now Filed For the FATCA
FATCA filings have grown steadily over the last five years---17% per year, in fact---and Forbes recently reported that 1,163,229 Report of Foreign Bank and Financial Accounts (FBARs) were filed in 2015. That would be over 1 million Americans, many of whom are middle class citizens working abroad, who must fill out hundreds of pages of paperwork each year regarding earnings accumulated in foreign countries. The penalties for failing to report are harsh enough to keep the percentage of FATCA filings on the rise.
Foreign banks have even stared turning American customers away over the last several years---the banks either have to comply with the U.S. regulations or face harsh penalties. Foreign compliance with FATCA is almost unanimous, but it is almost certainly involuntary.
Per FATCA rules, if a U.S. citizen’s foreign holdings exceed $10,000 at any point during the calendar year, he must fill out an FBAR. It doesn’t matter if he has filed that income on a U.S. tax return or if that income is entirely non taxable---the FATCA demands to know the details.
According to wealthmanagement.com, the number of Americans abroad who are renouncing their citizenship has quadrupled. The endless hours expats must spend to fill out the paperwork (up to 50), the thousands of dollars it costs for a professional to work through it for them, or the risk of severe penalties because of flawed filing has driven many Americans to give up citizenship entirely.
Now that we are five years into the reign of the FATCA, we can see the true results: an increasing number of renounced citizenships, a huge cost of implementation (all from an IRS that has experienced unprecedented budget cuts), and foreign frustration over the grabbing hands of the IRS. In fact, many Americans living abroad have struggled to secure mortgages and even the most basic banking services.
The IRS is already delivering some of the worst customer service in recent memory because of slashed funding. With such minimal resources at its disposal, it is hard to comprehend why so much IRS attention must go to law-abiding citizens simply trying live abroad.The IRS should focus its attentions on corporations and individuals trying to break the law rather than harassing law-abiding citizens and foreign financial institutions.
Perhaps the biggest issue of all is that the FATCA has brought so little revenue into American coffers. According to multiple sources, the act will bring in under $9 billion throughout the first ten years. In other words, the FATCA has hardly any impact on the yearly budget, but it has a huge impact on the millions of Americans living abroad.